I recently had several customers asking me what a umbrella policy is if they need one. If you have assets that you want to protect from accidental litigation, you may need an umbrella!
Imagine driving in a strange city in the evening. It's dark, rainy, you're not sure how to get back to the hotel. You stop at a crossroad and look at both sides while listening to instructions on the GPS system. The traffic is very clear, so you turn. Unexpectedly, when you turn, a drunken pedestrian walks into the street. You can't stop and beat people in time. When you imagine the worst, panic sweeps through your body.
Pedestrians can ask you to pay for medical expenses and wages. If they are unable to work because of their disability and are breadwinners, the family of the pedestrian can sue you because they are no longer able to provide income for their families. Is your car insurance sufficient to cover what the victim may ask? If your car insurance can't meet their needs, are there other assets at risk? [your home, bank account, retirement plan?]
If your car liability limit is the Illinois minimum, it will pay the injured party up to $25,000. If the injury is caused by an accident, this may not be able to cover the cost of surgery. The injured party can seek a lawyer to sue you and your personal assets may be at risk. Or, your salary can be used to help pay for the settlement.
Are you willing to let the court deduct money from your salary to resolve the lawsuit? Or may you force you to sell your house and settle with the injured party? Are you willing to liquidate your bank account in order to reach a settlement with the victim?
To make matters worse, if this person dies and leaves a family, you must consider that they do not have their main salary income now. This puts a heavy financial burden on the family and the court may be responsible for it.
You can add an umbrella liability policy to provide you with additional liability insurance at the lowest annual cost. Most umbrella policies start at $150 a year and have an insured amount of $1 million. This insurance policy protects your assets from litigation and protects you from unnecessary stress in unfortunate situations.
Orignal From: What is the umbrella policy?
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