Umbrella insurance protects people when they’re sued after an event that transpired at their home, in their car, or because of something they did. For example, if you’re skiing and accidentally hurt a fellow skier on the slopes, they could sue you for medical expenses.

Or let’s say you’re hosting a party at your home and someone trips down the stairs. They could sue you for any injuries as well as emotional pain and suffering. While some insurance policies cover this type of personal liability, there are limits to what they can pay.

Once those limits have been met, your umbrella insurance policy will kick in. Think of umbrella insurance as a secondary policy, with your homeowners, renters or auto as your primary policy.

An umbrella policy will pay for your legal expenses and protect you if you lose the case. If you win, an umbrella policy would cover your lawyer’s fees.

If you’re sued and lose, the judge could award the plaintiff an amount that exceeds what you currently have. In this situation, the judge will usually allow the plaintiff to go after your future earnings until they receive what they’re owed. If you have an umbrella policy, the insurance company will pay so your salary isn’t garnished for years to come. In other words, an umbrella policy covers your future earnings as well as your current assets.

When is it worth it?

It’s easy to be held liable for something that happened on your property—that’s why umbrella insurance is so popular. If you don’t own a home, have little to no net worth and don’t keep any dangerous equipment on your property, you can probably do without umbrella insurance.

However, most people should consider buying a policy. Umbrella insurance is necessary if you fit one or more of these categories:

  • People who own (or rent) boats, cars or other vehicles
  • Coaches of youth sports
  • People with dogs or dangerous pets
  • Parents
  • People who host guests in their home or on their property
  • Anyone who own rental properties
  • People who talk about other people or businesses
  • People who volunteer their time and services

Many of these activities increase your chance of being involved in a lawsuit, even if they might seem harmless. Why buy more insurance just because you have a dog? You won’t ask that after your sweet Golden Retriever runs out of the house and bites someone, leading to a lawsuit.

Umbrella insurance is honestly a must. It provides protection against claims and lawsuits from accidents you’ve caused and shields your future income from garnishment.

A $1 million policy is sufficient for most people and only costs $200 a year (about $16/month). It’s one of the most affordable insurance policies you can buy—less than the price of a few lattes.

The Agent Insurance Services recommends umbrella insurance to almost all of their clients, especially those with higher salaries. Most people should start with a $1 million policy and only buy more if their net worth increases.

Where to buy it.

In general, you can buy an umbrella policy from the same insurance provider you use for your other insurance. Call your agent to get their rates, and see if you can get a discount for bundling.

However, it could also be worthwhile to contact an independent insurance agent like The Agent Insurance Services to compare notes and see whether you’d save money by going with your existing insurance company or with a new one.

Call The Agent Insurance Services today and make sure your future is protected (330) 758-3339.

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