Umbrella Insurance — How Does It Apply to You?

Sometimes good things happen to us in life. You win the lottery. Your favorite uncle leaves you an inheritance after he had lived a long and happy life. You are successful at work, and you have been able to buy a house, save a retirement nest egg, and achieve financial security.

Unfortunately, sometimes bad things also happen. You have an auto accident and injure someone. Your dog bites a neighbor. A tree in your front yard falls onto a car during a storm.

Any of these “bad things” and many more can result in a lawsuit. Without proper insurance coverage, you can lose those “good things” you have acquired in life. You can even lose future wages if your salary is garnished.

More than likely, you have auto and homeowners insurance. You may wonder, why isn’t that enough? Well, all insurance has coverage limits — a set amount the carrier will pay in the event of a claim. If you’re sued, the cost of damages could exceed your home or auto coverage. And that excess has to be paid somehow.

That’s why you need umbrella insurance — to protect your “good things” when “bad things” happen. Umbrella insurance is not a substitute for auto or homeowners insurance; it is a supplement to cover what they don’t. When the limits of your primary coverage are exhausted, umbrella insurance comes in to make up the difference.

Here is an example. You have a car accident, and you get sued for $750,000 — but the limit on your auto insurance is $300,000. How do you pay the additional $450,000? Umbrella insurance.

One misconception about umbrella insurance is that it is only for wealthy people. But consider this. Anyone can be sued — wealthy or not. And if you don’t have the money to pay for a lawsuit, you can lose your house, other assets, even your future earnings.

What are some indicators that you may need umbrella insurance? Here are a few examples.

You drive a lot. You may be a cautious driver, but the more you drive, the higher your chances of being in an accident. In 2018, 40,000 people died in car crashes, and 4.5 million were seriously injured, according to the National Safety Council.[i]

You have a dog. According to the Insurance Information Institute, “Homeowners and renters insurance policies typically cover dog bite liability legal expenses, up to the liability limits (typically $100,000 to $300,000). If the claim exceeds the limit, the dog owner is responsible for all damages above that amount.”

You entertain people at home and serve alcohol. Many states have “social host liability” laws. If someone drinks too much at your home and gets into a car accident, you can be sued for negligence. You need to check your homeowners’ policy to see if you are covered and what the limits are.

You volunteer at a nonprofit organization. Many nonprofits have “directors and officers” insurance that covers lawsuits against board members for actions such as harassment or discrimination. But, a locally based nonprofit with a tight budget may have limited coverage.

You own recreational equipment or a vehicle. Whether you own a trampoline in your backyard, a boat for fishing, or a snowmobile, no matter how careful you are, the added precaution of umbrella insurance is an additional safeguard.

You coach a sports team. Accidents happen in sports, even when you have safety measures in place. If a child gets hurt and the league doesn’t have enough coverage, you need to be sure that you do.

You can be sued for causing an injury or death, medical expenses, lost income, or “loss of consortium” (loss of a close family member). You need umbrella insurance protection if the lawsuit exceeds your auto policy limits.

Umbrella liability insurance from Starr Wright USA offers assistance for property damage and bodily injury. The coverage is affordable, with limits from $1 million to $5 million.

For federal employees who work and travel internationally, the coverage is applicable worldwide. Your umbrella coverage can include domestic partners and children at home but away at school or in military service. Options include coverage for domestic employees, another driver driving your car, driving non-owned vehicles, and protection if you are a victim of a hit and run accident. Details are available at wrightusa.com.

We live in a world where lawsuits are commonplace. Even when people make every effort to ensure the safety of others, accidents do happen. Homeowners and auto insurance are considered necessities. Umbrella insurance coverage can be just as necessary to protect your finances and your future.

[i] 11 Reasons You Need Umbrella Insurance Right Now

8 Common Liability Claims That Require Umbrella Coverage
What is umbrella insurance? It can protect you if you get sued

Article authored by and contains the opinions of Starr Wright USA; the article is offered solely for informational purposes.

Starr Wright USA is a marketing name for Starr Wright Insurance Agency, Inc. and its affiliate(s). Starr Wright USA is an insurance agency specializing in insurance solutions for federal employees and federal contractors. For more information, visit WrightUSA.com. Starr Wright USA is a division of Starr Insurance Companies, which is a marketing name for the operating insurance and travel assistance companies and subsidiaries of Starr International Company, Inc. and for the investment business of C.V. Starr & Co., Inc.