What Is An Umbrella Policy, And Why Carry It?

How often do you hear on the news about an injured car accident victim who received a million dollars in damages because the driver of another car accidentally crossed the double yellow or ran a red light? We all feel bad for the victim, but have you ever wondered who pays that million dollars? It’s the other driver. And what if that other driver—who had no malicious intent but who simply looked away for just a second—were you? And what about the small business owner who must close up shop after someone slips and falls in her store and she can’t afford to stay open while paying the awarded injury claim?

Put yourself in that hapless driver and business owner’s shoes. You’ve been ordered to pay a million dollars in damages. Your car or business insurance policy covers $300,000, then the courts go after your personal and business assets. Soon, you’re ruined—all because of a careless mistake. Fortunately, this doesn’t have to happen if you protect your liability with a personal umbrella insurance policy.

For a small additional premium each year you can purchase another million dollars of insurance coverage as a buffer between you, the courts, and financial ruin. Umbrella insurance policies offer protection against a wide range of insurable events, like: 

• Injury on your property
• Awards for accusations of slander
• Liabilities arising from employee errors

Unfortunately, even if you are sued and a large judgment does not result, you may be liable for legal fees and court costs that eat into your assets. An umbrella insurance policy can prevent that from happening. 

Before getting a California umbrella insurance policy, be sure to check your limits and deductibles on your current policies. Your insurer will likely declare you responsible for bridging any gaps between policy limits and umbrella policy amounts so make sure you have sufficient insurance and resources. 

Accidents, moments of negligence, or even frivolous lawsuits happen every day. If you have assets that you have worked hard to build and protect, don’t lose them due to one mistake or even an out-of-the-blue lawsuit. Purchase an umbrella insurance policy and add a buffer between your assets and financial ruin.