Who Really Needs an Umbrella Insurance Policy, Anyway?

Insurance is a tricky subject. A lot of people think about the insurance policies that everyone else talks about, like home, auto, and life insurance. Yet you might be surprised at all of the other types of insurance products out there. For example, there is umbrella insurance. This is something that a lot more people can use than they think. Yet in order to understand why umbrella insurance is so critical, a little bit of background information is required.

You see, all insurance policies have limits. These limits are going to depend on your insurance carrier’s risk profile for you, but every policy has limits. For example, let’s say that you are taking out coverage on your home. That coverage might have a limit of $300,000 dollars. But if a child jumps over the fence of your home that has a swimming pool and they drown or get seriously injured, your three hundred thousand dollar policy is not going to cover much of anything — and you will have to pay the difference between what the policy covers and the extra that is owed. That’s a lot of money out of pocket.

That’s actually where umbrella insurance steps in. It will cover the excess damages owed that fall outside of your general insurance policies. In the past, this used to be insurance that only wealthy individuals needed to have, but that’s no longer the case now. You will need to make sure that you cover yourself appropriately if you have at least 200,000$ in assets. Quite frankly, that’s not hard to do if you own a home — you’re going to be risking your biggest asset right then and there.

So going about getting umbrella insurance is something that just about everyone should think about — even if they might not realize it. Don’t rely on age old sayings like “only rich people need umbrella insurance”. If you’re starting a small business with a storefront, you’re going to need umbrella insurance too. The last thing that anyone wants to deal with is realizing that they aren’t as well protected as they think, but hiding in the dark about it isn’t going to help matters either.

So the next step that you must do is a little bit of comparison shopping. You always want to make sure you’re paying the right price for umbrella insurance coverage. You don’t want to just find yourself getting something that you think is good, only to find that you could have saved a lot of money and still been properly protected.

This is also a time where reading the fine print is a good thing. You want to make sure that you have all of your ducks in a row, so to speak. No one likes to think that they’re protected, only to find out how lacking their protection really was because they just filed a claim that got denied. The most common reason for a claim being rejected is because the events were not actually covered under the policy the way the policyholder thought they would be.

As a reminder to business owners, umbrella insurance is actually something that’s absolutely tax deductible, so make sure that you save your receipts so that your tax preparer can add that to your expense statement. Why would you want to pass up a tax deduction if you didn’t have to?

Overall, now is definitely the time to start thinking about umbrella insurance — why not start today?