Umbrella Liability Insurance

Having umbrella liability insurance is the best way to supplement an existing policy; it also provides extra security against being sued for an accident and being required to pay the judgment out of pocket. Unfortunately, accidents happen all the time; a driver can look away from the road for a second and cause a major collision. A tree in a person's yard can be struck during a storm and fall, damaging a neighboring house. In both of these cases, the person deemed liable for the damages must make reparations for whatever monetary loss the victim incurs. And many people mistakenly assume that since they have insurance, whether it be auto or homeowner's, that they are covered completely in case of an accident. While this is, for the most part, the case, when the accidents are of a serious nature, sometimes the financial liability of the insured is more than his insurance company has agreed to pay. In those situations, having an extra, supplementary policy can protect a person from hefty judgments and the loss of money, property, and assets.

In today's society, filing a lawsuit seems to be a person's first course of action if something does not go his way. Lawyers advertise in continuous loops on the television, promising future clients that they will not accept a penny until the case is won, with the understanding, of course, that the lawyer is shrewd enough to ensure that happens. If a person slips and falls in a neighbor's yard, breaking an ankle, the victim can take his case before a judge, who may or may not award substantial punitive damages. Granted, many lawsuits are justified, and give the complainant an avenue by which to seek justice in the event that an accident happens and the insurance does not totally compensate the costs. Keeping in mind, however, that these suits are prevalent and judgments can be financially devastating, a person would be taking an enormous risk by not having umbrella liability insurance.

An important thing to understand is that a policy, if it is a standard one, has a very clearly defined limit that the insurance company will pay out if the insured causes an accident, or is found liable for one. Depending on the company a person is with, and the policy they have, these limits may vary, but they are usually in the hundreds of thousands. So what happens if a person's policy will only pay $300,000 in case of an accident, but the damages total nearly one million dollars? This is where umbrella liability insurance comes into play. The extra policy does just what the name suggests; it acts as an umbrella, covering the insured from massive out of pocket costs. As soon as the primary policy reaches its maximum payout, then the supplemental umbrella insurance kicks in, paying the rest of the bills. Without this extra coverage, however, a person is leaving himself vulnerable to a lawsuit, where he may be required to pay the difference out of his own pocket.

The Bible warns that people should be prepared for misfortune and should make provisions before a disaster. "Give a portion to seven, and also to eight; for thou knowest not what evil shall be upon the earth" (Ecclesiastes 11:2). From a financial standpoint, having umbrella liability insurance is yet another way to protect one's assets from the threat of a future lawsuit or judgment. And doing so does not have to put a strain on the pocketbook. Many assume that this type of coverage is meant for the wealthy, and that, as such, it is extremely expensive. The reality, however, is that not only should all people consider purchasing umbrella liability insurance, but that once a person makes the decision to, he will also be surprised by its affordability. For a basic plan, a buyer can expect to only have to pay a couple hundred dollars annually, and many consider the cost to be well worth the peace of mind.

Before going to purchase umbrella liability insurance, a person needs to be just as thorough as he would when buying other forms of insurance. Many experts and financial planners advise using one company for all of a person's policies: homeowners, auto, life, umbrella, etc. By doing this, a person ensures that if a situation ever arises where both the basic policy and the extended umbrella coverage are required, only one company will be handling the matter. This negates the possibility of two different companies fighting over who is going to pay what after an accident. This also offers the consumer the ease of only having to pay one collective bill for his policies each year.

Granted, many financial planners have varying opinions on the wisdom of having an umbrella liability insurance policy. Some will say that only those with a certain amount of net worth should be concerned with having the extra protection. Others, of course, claim that anyone with money in the bank should look into buying a policy, claiming that the best way to prevent a financial disaster is to prepare for one. Regardless of what the professionals say, and who they ultimately decide should be concerned with umbrella liability insurance, the responsibility is up to the consumer to make sure he is adequately protected and to decide for himself if he wants additional coverage. He is the only one who can decide whether the added insurance is necessary, and if so, how much liability he is willing to pay for. And while chances are that the insured will never have need of the extra protection, many find they have peace of mind just knowing that the policy is in place.

Liability Insurance Coverage

The protection that is offered by liability insurance coverage can serve as both a shield and a safety net for private citizens as well as professionals in the marketplace. There are many different types of policies that come under this heading. In general, this coverage will protect an insured individual from financial devastation should that individual be found to be liable for harm to another person. The definition of harm can encompass damage to property, bodily harm requiring medical care, pain and suffering, income lost, or a number of other issues. Purchasing policies that protect a family's assets is not only a good idea, in some cases it is required by law. For drivers, basic liability insurance coverage is required in most states. Of course, many consumers prefer to opt be covered for more than just the legal minimum amount. Experiencing an accident while driving can happen to anyone and even the best driver could be found at fault. The amount of debt that an uninsured or under insured consumer might face if they are found to be at fault in an accident could be staggering. Professionals who find themselves facing a lawsuit from a client may deal with similar financial devastation. Protecting a family's security and well being only makes sense in the light of such risks. Hopefully, the insured individual will never need to test the limits of the policy that they choose. But making an investment in asset protection can add substantially to a family's peace of mind.

One of the benefits of liability insurance coverage is the fact that it can be much less expensive than other, more comprehensive policies. In the area of automobile protection, a policy that will cover the cost of damages to the insured individual's vehicle as well as any damage done to another party can be very expensive, especially when compared to liability only policies. But there is a risk that is associated with carrying less protection. In a worse case scenario a policyholder may find that they are liable for much more than they bargained for. When this is the case, many policyholders end up regretting a choice to go with less coverage. Other types of protection within this category include business and professional liability policies. D & O policies are geared toward protecting a company's directors and officers. Some lawsuits will not hold entire companies liable for any mistakes that were made by a director or officer. Policies that protect these individuals in the event of a lawsuit are considered necessary by many organizations. Worker's comp is another type of liability insurance coverage and is a mandatory protection that companies must carry for their employees. This product will handle any expenses incurred if an employee gets injured on the job. Medical and professional policies offer protection to doctors, lawyers and members of other occupations against a number of lawsuits including negligence or malpractice suits.

Businesses have specific needs when it comes to liability insurance coverage. From commercial umbrella policies to employment practices protection, there are products that can fit the unique needs of most organizations. Liabilities in the area of employment practices could include protection against claims of wrongful termination or discrimination and harassment suits. Non profit organizations may often need coverage in this area as well and will have certain needs that are unique to a not for profit situation. If a company's product is found to be faulty or dangerous in some way, lawsuits for damages from angry consumers could result. Protection against any liabilities for damages that are the result of unintentionally faulty products is something that can bring extra financial security too many organizations. When a company offers technological services, they may be susceptible to lawsuits regarding allegations of omissions or mistakes. Professionals such as engineers, accountants, architects, lawyers, doctors, and a number of other professions could be in danger of facing similar lawsuits and could be in need of insurance products that offer protection. Some policies will even cover the costs of mounting a legal defense. Whether or not an insured professional wins their case, the cost of going to court can be quite high. In our litigious society, purchasing liability insurance coverage can make a huge difference for businesses and professional who risk facing costly lawsuits. Even when a suit is justified, having protection against such losses is important.

Any professional who could face lawsuits brought by dissatisfied clients can benefit from this type of protection. The Bible tells believers that there is nothing to be afraid of when God is the source of strength in their life. The Lord is my light and my salvation; whom shall I fear? The Lord is the strength of my life; of whom shall I be afraid? (Psalm 27:1) There are also many short term liability insurance coverage products. One of these products applies to specific one time events. Underwriting of this nature offers protection against liabilities related to that event.

Homeowners are in need of liability insurance coverage as well. Most homeowner policies offer protection of this nature to some degree. But individual homeowners may feel that they need more coverage than the standard policy offers. Families who have home based businesses, particularly businesses that deal with clients or students in the home may be in need of additional protection. This protection will cover any losses sustained by injury to visitors to an insured individual's home. The dollar amount of protection for these and other types of liability policies can vary widely. Each policyholder must decide just how much protection is needed for their unique circumstances.





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