Friday, April 1, 2016

Is Umbrella Insurance Necessary?

With so many different types of insurance out there, how do you know what exactly you need for your unique situation? What happens when you exceed the limits of your auto or home insurance and don't have the cash to cover the rest? Insure the Lake wants to help you understand what umbrella insurance is and if it's necessary for you.

What is Umbrella Insurance? 

Umbrella insurance is a type of liability insurance designed to protect you against lawsuits. While other insurance policies at the Lake of the Ozarks are specific to one type of coverage such as an auto policy or a homeowners policy, umbrella insurance is very different. Like an actual umbrella, an umbrella insurance policy provides extra protection, covering most aspects of your financial life. Therefore, anytime you exceed the limits on one of your other policies, your umbrella policy kicks in to cover the extra costs.

What does Umbrella Insurance Cover?

Although 85% of umbrella insurance claims are related to car accidents, umbrella insurance also covers against accidents that occur in your home. Types of damage covered by an umbrella policy include:
  • Bodily Injury - If you injure someone in an auto accident and the medical bills exceed your auto insurance's limits, the umbrella policy will kick in to cover the rest. Similarly is someone gets hurt on your property, the umbrella policy is applied after what the homeowners insurance will cover. This umbrella policy often covers other items that your general insurance does not; for example, if your dog bites someone while you're on a walk.
  • Property Damage - If you or your teenage child crashes the car into the neighbors fence, mailbox or even the house, the umbrella insurance will cover anything that exceeds the limits of your auto insurance policy. Other umbrella insurance coverage includes things like your pet clawing up a priceless painting at the dog sitter's house or your child knocking over an expensive antique vase at your friend's house.
  • Other Types of Legal Damage - Your umbrella insurance policy can also protect you if you're sued for libel or slander. It can also protect you against suits for false arrest, malicious prosecution, violation of privacy and a variety of other civil charges. 
  • Legal Fees -One final perk of this type of coverage is that it will cover your legal fees and court costs in a lawsuit. Lawyers are expensive and even if it's not your fault, you could find yourself in court. With an umbrella policy, you know you can afford a good lawyer to protect your assets. 
Although umbrella insurance covers a lot of different scenarios, there are certain types of lawsuits that many policies specifically exclude. Most umbrella policies do not cover malpractice lawsuits, workers compensation claims against employers, damage caused by a business or business related activity, or damage that you cause intentionally to any person or property. It's also important to understand that umbrella insurance only protects you from being used for damage to other people or their property. If you're the one that gets hurt, it's up to your health insurance to pay for the damage and the rest comes out of your pocket. In that case, an umbrella insurance policy can't help you.

What does Umbrella Insurance Cost?

According to Bankrate, umbrella insurance is "the absolute best buy in the insurance business." Umbrella insurance policies are generally sold in $1 million increments and you can get $1 million worth of coverage for around $150-$200 per year. The actual cost however, varies based on where you live and how good a risk the insurance company thinks you are. Factors that could affect your rate include your job, your hobbies, your pets, your driving record and any previous lawsuits you were involved with.

Who Needs Umbrella Insurance? 

The point of umbrella insurance is to protect your assets. Therefore, if you have a lot of assets that you could potentially lose, it might be a good idea to purchase an umbrella insurance policy. While it's easy to assume that only a rich person would need that much insurance coverage, you'd be surprised at home important a policy like this could be for an average member of the middle class. Ask yourself some basic questions like:
  • Do I own a home? 
  • Do I own any other significant assets other than a home? 
  • Have I built an investment portfolio or a retirement savings account? 
If you answered yes to any of those questions, then you'll want to make sure those assets are protected. Think about the total value of all your assets. Now look at the amount of liability insurance coverage you currently have with your individual policies. Is that insurance amount enough to cover all your assets? If not, you should talk to an independent insurance agent at the Lake of the Ozarks today.

Our Lake of the Ozarks insurance company specializes in all type of insurance policies. We are one of the largest insurance agencies in the state of Missouri. As an independent agency, we have direct contracts with over 50 insurance companies and access to hundreds more brokerage services. This allows us to shop around and give you the most comprehensive coverage at a competitive price! Contact us today at 573-348-2794 for all of your Lake of the Ozarks insurance needs.  

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About the Author: Steve is a double back-flip insurance ninja. He was named Young Insurance Agent of the Year by the Missouri Association of Insurance Agents in 2010 and is a Certified Insurance Counselor. When he is not helping customers, he enjoys community service, Latin dancing with his beautiful wife and going on adventures with his two awesome sons.

Steve Naught, CIC
3736 Osage Beach Parkway
Osage Beach, MO 65065
Next to Golden Coral