Umbrella Insurance: What it is and why it’s so crucial for everyone to have it
Your teenager decides to throw a party while you and your spouse slip away for what is a much needed, and well deserved, weekend alone. Back home, your child is presumably, just “hanging out”, watching movies or playing video games. What if he or she invites friends over, one of the friends brings alcohol, another friend gets drunk and decides to walk home. She lives in the same neighborhood and it isn’t too far of a walk. While walking along the edge of the road, she stumbles and get hits by an oncoming car that is turning the corner. That friend suffers massive internal and external injuries and has to have multiple surgeries. Her prognosis is positive, but she still has a long road ahead and a long list of medical bills to go along with it. Was the driver at fault? Maybe he didn’t see the victim; it was dark outside and he wasn’t the one drinking. It was a mere accident. But why was she drinking? Didn’t anyone try and stop her? Where were the parents? Did they know she was going to a party where there would be alcohol? Probably not. Where were the insured’s parents during this? After all, the minor consumed alcohol in your home and as the homeowner, you’re the one responsible for what goes on at your residence; even if you aren’t there. Right? Either way, someone needs to pay for the victim’s medical bills and someone will.
So, Which Party In This Scenario Should Be Carrying An Umbrella Insurance Policy?
The Answer: ALL Parties!
The truth is, this scenario and any other situation where an accident can or may occur, requires the need for an umbrella policy. There is no specific person, lifestyle or situation that qualifies for it because there is no telling when or what might happen. Everyone should carry it.
It goes without saying that situations like the one above (less or more extreme) happens on a daily basis, all over the country including Michigan. We know that an accident can occur at any given time, anywhere; that’s why it’s called an accident. What’s surprising is that a lot of people aren’t prepared for such accidents. A majority of people “assume” this type of scenario is rare or won’t happen to them. But it’s easy to assume you will never need something, until you’re forced into a situation when you do. Then it becomes a necessity. Now, more than ever, there are things happening amongst our society that significantly warrants better protection.
What Exactly Is Umbrella Insurance & How Much Does It Cost?
Umbrella insurance is additional liability coverage designed to protect your assets and your future against major claims and lawsuits, when standard auto and home policies meet their limits or may not cover the claim at all. The great thing about umbrella policies, is that they cover all personal assets…your autos, home, boat, ATV, etc. The coverage is structured to protect everything as a whole and come into effect where your other policies can’t. The cost of an umbrella policy in comparison to the extra protection and peace of mind that it offers, is minimal. On average, the cost of a $1 to $2 million umbrella is around $200 a year, and with most companies, can be combined with the home insurance.
Today, lawsuits are everywhere and courts are awarding record numbers in settlement amounts. Take for instance the huge advances in technology and the ever present social media outlets that are becoming increasingly, more popular and less controlled. Most of us throughout the day either “check-in”, “snap”, “tweet” or “update” what’s going on in our everyday life. A seemingly “harmless” status update about an argument with your boss on Facebook or instagraming a picture of your neighbor’s messy yard, can turn into a multi-million dollar libel or slander lawsuit. Some of which may not be fully covered by your standard home, auto or renters policies.
On average, the liability portion for an auto and/or home policy covers up to $300,000. But if you or one of your family members causes a serious auto accident or is found guilty of harassing or bullying another individual (like on social media), the cost for liable actions can easily run into the millions. You might also be surprised to learn that declaring bankruptcy will forgive the settlement. It won’t. Your wages, assets and retirement will all be garnished until the settlement is resolved in full. If you find yourself being sued, an umbrella insurance policy covers the settlement, medical bills, court fees, attorney’s fees, and more. It’s for these very reasons that we need to better protect ourselves and our loved ones.
We shouldn’t be asking where we can cut corners to save on insurance. We should be asking ourselves, what will it cost to ensure my family is safe and protected. Don’t get me wrong, savings is a huge factor when paying monthly bills; the cost of living is at an all-time high. But when it comes to the importance of insurance and covering your needs and protecting your future…that shouldn’t come with a measureable price tag. You may just find yourself saving for absolutely nothing in the end.