Personal Umbrella Insurance 101 – My Financial Wellness Guide- Part X

In a previous post, I shared some insights on Liability Insurance and important things to consider in managing potential exposure. Insurance is a funny thing, kind of like credit – when you need it, you can’t get it – it’s something you have to be intentional about building before you need to use or have access to.

Recently, one of my readers asked me to write a little more about the Personal Umbrella policy, so I’ll wrap up the insurance section of My Financial Wellness Guide with this post.

As a reminder, Liability insurance protects your assets as well as your future earning potential. In the early days of your professional career, you may not own much or even have an above average income. Unfortunately, it’s during these times when a lawsuit could cause significant setbacks to your goals and aspirations. Renter’s insurance and car insurance is more about protecting you than your stuff.

Consider for a moment if someone slipped on your property and had significant medical expenses. What if your car slipped on ice and damaged property or another person? How about a child’s friend getting hurt during a birthday party or play date at your home? Did you know that many homeowner’s policies actually exclude protection or charge additional premiums if you own a trampoline or an in ground swimming pool? It doesn’t matter how good a friend is, medical expenses add up quickly and lawsuits happen.

A Personal Umbrella policy provides additional liability protection, on top of the liability limits on your auto, home, boat or motorcycle policy. Most likely you will need to have a minimum of $300,000 in underlying limits to qualify, or pay a higher annual premium. Personal Umbrella policies begin at the $1 million coverage level. The policy also provides legal representation in addition to the policy limits.

It’s important to note that being held liable does not mean you intended to cause damage or injury. It can mean you are responsible for the thing or person who caused the damage or injury. You can be found negligent in maintaining your sidewalk, trees, proper lighting or twenty thousand other things.

Just as with any other legal or financial decision, do your homework first. Ask your agent for a quote and a copy of a sample policy, so you can read the exclusions and understand if it’s the right fit for your needs. Go with a high rated insurance carrier and compare a few policies. You’ll be surprised how affordable a Personal Umbrella policy can be – usually starting around $200 per year!

If you have a side gig or are building your own business, take time to research a General Liability Commercial policy and options that may best suit your potential exposure. Don’t let an accident or unfortunate event bring your life to a halt. Be informed. Plan well.

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