Umbrella insurance may seem enticing, as it serves almost like an extension of your existing policies, be they auto, home, or recreational insurance. Many insurance companies recommend it as a way to protect your assets if you’re at a high risk of being sued. The question is, how likely is anyone to be sued for more than their insurance can cover?
Here, we’ve created a list of possible situations where someone may be at substantial risk for lawsuits, and just how umbrella insurance can help in case of legal action.
It’s important to note that umbrella insurance only takes over once you go over the allotted funds given by your policy. So if your auto insurance covers $100,000 of damages, and you’re responsible for covering $150,000 of damages from an accident, the umbrella insurance would only cover the $50,000 left over.
If You Own Something Dangerous
It’s unlikely that most people would own something designed to injure others, but umbrella insurance can help when your items accidentally cause harm.
Common examples of dangerous items given by insurance companies include trampolines, swimming pools, or even dogs. In the unfortunate event that someone takes legal action after being injured while jumping on your trampoline or falling into your swimming pool, umbrella insurance can help to protect your assets from being used to pay legal fees and damages.
If You’re a Landlord or Business Owner
If you own a property that is rented out to other people, you are at a higher risk of being involved in legal action against yourself. If the court decides that you need to cover any damages or fees for the renter, umbrella insurance can help cover any payments your other insurance policies can’t totally cover.
This also applies to business owners, whose property and assets can be at risk in a lawsuit. Any investments or savings you’ve laid aside could be lost, which is where umbrella insurance can help protect those assets.
If You Compete in a Contact Sport
If you take part in any sport that involves direct contact or has the risk of injuring others, it’s probably a good idea to invest in umbrella insurance.
With many competitive sports like football and volleyball, or even less competitive sports like marathon running, skiing, and swimming, it’s always possible to inadvertently injure another player. In the unlikely case that you have to cover the other player’s medical bills, umbrella insurance can make sure you don’t lose anything from your personal savings and other accounts.
If You Own Significant Assets
You may have noticed a common theme in these examples, which is that every scenario involves protecting a person’s assets. These can include savings accounts or investments with significant amounts of money put into them, and assets like property or housing. In general, umbrella insurance can help in situations of major losses of income that are impacted by legal action from others.
If you’re in the public eye, or just have many assets you want to protect, umbrella insurance is the perfect way to ensure the safety of your future economic endeavors.