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Thank Goodness I Have an Umbrella! So What Is It?

September 21, 2011 | Comments: 0 | Views: 151

What is an Umbrella? We immediately envision a water proof canopy to hold over ourselves during a rainstorm. I like to picture those nice size ones that not only protect your head and shoulders, but maybe your clothes, briefcase, etc. We all have that kind of umbrella. Most of us just don't all know where it is at this moment. You organized folks out there know where your umbrella is. You probably have one in your vehicle, your home and where you work. The rest of us have 2 or 3 also. They have just all ended up in the same place....or broken. We really don't think about our umbrellas, until it rains.

A liability umbrella is the same concept. It provides additional liability protection for all your insured property that is listed under the umbrella. Is this important? It depends. Do you have a job, savings, assets, money buried in the yard? Then yes. Do you feel that it would be important to make sure to provide financial assistance if you cause an accident where others have been injured or disabled? Then yes.

The easiest way to understand how an umbrella works in most situations is to give you an example. Example: You are driving your vehicle and a ten year old on a bike comes between two parked vehicles. The sun is in your eyes and you see him too late. You have no time to react. The child is paralyzed for life from the waist down. Your insurance policy on the vehicle you are driving has a per person limit. Let's say for the example your limit is $250,000 per person. The hospital bill alone exceeds that limit. Your insurance would pay $250,000 to the guardian of the ten year old. The insurance company would not provide any additional legal support once the limit is offered. The ten year old parent obtains a lawyer to recover damages from you for additional medical bills and additional expenses needed for the care of the child now and in the long term future. You get an attorney to help represent you to negotiate a settlement. You are responsible for the attorney fees and whatever settlement is awarded. How do you pay this? Equity in your home, assets, other property, wages? What if you can't?

A lien would be placed on you...possibly for life. If you have an umbrella, the auto policy would be used first. Once that amount is used, then the umbrella limit would be available for additional damages. Your insurance company would still provide legal assistance. As long as the umbrella limit is not surpassed, you have no worries regarding your assets or future income. The second part of this is the moral issue of feeling responsible in this situation. This situation is truly an accident but legally we may still be responsible and morally, most of us would feel awful about injuring anyone. Especially a child. Having the additional coverage an Umbrella provides makes us feel better that we can at least provide some financial assistance to the child and his family to help with the additional expenses they have.

Most Umbrellas begin with a $1,000,000 limit. Depending on your financial picture, higher limits are available with most carriers. Talk to your agent about specific additional coverages the policy provides and get a quote. Make an informed decision on cost versus benefit for you.

Vicki Myers

Source: EzineArticles
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