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What is umbrella insurance?

Many people overlook this personal insurance coverage option, but in the event they are ever found liable for injuries or damages, it is protection they might be very grateful to have.

Personal umbrella insurance policies have been part of the insurance marketplace since the late 1940s. But, over the past seven decades, who this option is a good fit for has changed dramatically.

What originated as an insurance policy specifically designed to cover the increased exposures of those with a significant amount of wealth or assets, or a large public persona, or all of the above, has now become a policy that is critical for every person to consider.

In today’s world, your everyday acts, like driving to work on a chaotic Route 3, walking your dog in Whitman Park, or letting the neighborhood kids use your pool, could result in a serious accident and make you the target of a lawsuit. That’s why it’s very smart to look into having an umbrella policy.

Purchasing an umbrella insurance policy…

  • gives you added liability protection, over and above what you currently have in your other personal insurance policies, for lawsuits and claims against you
  • covers your legal defense costs if you are sued for damages to other people’s property or for injuries you caused, whether you’re found negligible or not
  • pays for any judgments against you or for a settlement that you might reach with a claimant in a lawsuit

In addition, an umbrella policy might cover expenses associated with a lawsuit against you for alleged libel or slander, for example, if you post or write something online that someone considers offensive. Because, yes, even leaving a bad Yelp review or tagging someone in an unflattering Instagram photo can make you vulnerable to a lawsuit.

At Austin Insurance, we feel strongly that the extra protection of an umbrella policy might be the most important safeguard for your financial future.

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An umbrella policy is like the guardian angel of insurance policies

Right now, you may have insurance for a vehicle, or maybe for both a house and a car, or perhaps even for multiple homes, cars and other assets, like a boat, motorcycle, and more. All of these insurance policies that cover your property and vehicles come with liability coverage, but only up to a certain limit. If you, someone in your household, or even a pet, is ever found liable for an accident and sued for injuries or damages that exceed these limits, then you will be responsible for paying for the additional legal fees, settlements or judgments against you.

Do you know how you would pay for legal and other lawsuit-related expenses which can often surpass six figures?

First, you would probably have to dip into any hard-earned cash you’ve saved up. If that runs out, and there are still bills to pay, then you might end up having to sell off some, or all, of your non-cash assets – like a car, home, or boat. And, if you either do not have these financial resources or all of your savings and assets are still not enough to cover lawsuit-related costs, then you might be obligated to turn over any future earnings, including wages, money that you get back on your taxes, inheritances, and lottery winnings, to lawyers, claimants, and other collectors involved.

Or, you could buy yourself an extra level of protection and purchase an umbrella policy. In the event that you are sued, and the related costs soar beyond the liability limits of any of your underlying personal insurance policies, then you would be able to make a claim against your umbrella coverage.

This type of financial protection must be expensive, right? Actually, an umbrella policy is an extremely affordable way to guard against the things that you don’t know if or when they will happen. You could invest as little as $25 a month to secure around $1 million in additional liability coverage, or you could choose even more protection – most companies offer up to $5 million in additional liability – without adding that much more to your policy premium.

Determining your individual policy premium will depend on a variety of lifestyle factors, some of which might drive up your premium and some which may help you save money:

  • Factors that may increase your premium

  • High net worth: Since your umbrella policy should be equal to or greater than your net worth, the more assets you have, the more expensive your policy is likely to be.
  • A teen in your household: It’s not just your auto insurance that can be impacted by having a teen driver – since this age group is more prone to car crashes and causing property damage and injury, having a teenager might also increase the cost of your umbrella policy.
  • High risk profile: There are many things that a carrier will view as adding risk to your life, including owning a dog, having a pool, living in a coastal property, or frequently entertaining at your home.
  • Factors that may lower your premium

  • Good credit history: The better your credit rating, the more desirable you become to carriers which should be reflected in a better premium.
  • Driving records in your household: Insurance providers will review the driving records of every licensed household member for driving infractions, and speeding tickets, and accidents; clean records across the boards could help keep your premium low.
  • Bundling your umbrella with other personal lines policies: You may already be saving money – up to 25% – by bundling your home and auto. If you add your umbrella policy to these other personal lines policies with the same carrier, you might rack up even more savings.

At Austin Insurance, we cannot predict what is going to happen to you in the future – what type of damage you might cause if you get in a car accident, if and when someone might have a serious accident on your property, or who your over-friendly pet might get too aggressive with and injure. But what we can do is find you an umbrella policy, at a price you can afford, that will be there to financially protect you and your family should you ever need it.

How Austin takes care of you and your insurance needs is different from all the rest

Our team takes an extremely personal approach to finding you the right insurance products, particularly the proper umbrella insurance for your level of risk. We want you to have the highest level of financial protection that you can afford, but no more than you need for your specific lifestyle.

To customize the insurance process for each individual client, we go through a thorough risk analysis with you to understand what your exposures are and how likely you are to find yourself in a situation where an umbrella policy could be needed.

Here are just a few of the questions that you can expect us to ask as we assess the risks you might face:

  • Do you own a dog?
  • Do you have a swimming pool or hot tub?
  • Do you have teenagers and are they drivers yet?
  • Do you own a car and/or any other vehicles, like a boat, motorcycle, Jet Ski, or ATV?
  • Do you employ a housecleaner, nanny or other staff in your home?
  • Do you entertain frequently?
  • Do you own a gun?

Together, we will discuss the implications of a “yes” answer to any of these questions and several others. We will also review your key assets, including any homes, cars, retirement accounts, savings accounts, and other important possessions. Then, we will look at your current auto and home or renters insurance coverages, to see what liability protection they already offer. Finally, with all of this information in hand, the Austin team can recommend a level of umbrella coverage that we believe will be the right fit for you and your level of risk.

As your local insurance specialist, we believe it’s our responsibility to take the time and care to talk to you about umbrella insurance. This powerful coverage extends worldwide, may add $1 million (or more) of liability protection to what you already have, and could be there for you in a worst-case scenario situation with your car, home, or boat. Plus, it does all of this for an incredibly reasonable price.

At Austin Insurance, we emphasize the importance of a personal umbrella to virtually every client we work with because we know that it is a valuable insurance coverage that you will appreciate should you ever need to use it.

To experience our personalized approach to umbrella insurance, please call the Austin team today, 781-447-5561.