Who Needs an Umbrella Policy and Why You Need It

If you're a business owner or entrepreneur, you likely have a general liability policy to protect against lawsuits and financial losses.

Having an umbrella policy provides an additional layer of protection, covering liabilities that exceed the limits of your general liability policy.

An umbrella policy can help protect your personal assets, such as your home and savings, from being seized to pay for a lawsuit.

For example, if you're found liable for a serious injury or death, an umbrella policy can help cover the costs that exceed your general liability policy's limits.

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An umbrella policy protects your existing and future personal assets, including wages, inheritance, and lottery winnings, against the cost of losing a lawsuit over a car accident or property accident.

It provides an additional layer of security to those who are at risk of being sued for damages to other people's property or injuries caused to others in an accident.

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You don't have to be wealthy to need an umbrella policy - your wages can be garnished even if you don't have any assets.

An umbrella policy picks up where your auto and homeowners insurance policies leave off.

It has a high deductible, which is designed to be met by your other policies, and costs around a few hundred dollars a year for this coverage.

This extra coverage can help protect you from the high costs of medical expenses and lost wages that can quickly become very expensive if you're sued.

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An umbrella policy provides extra liability coverage beyond what regular homeowners or vehicle insurance offers. This can be crucial for protecting your assets.

To own an umbrella policy, you must already have a standard homeowners, auto, or watercraft policy. The umbrella policy kicks in after the regular coverage has been exhausted.

You might need an umbrella policy if you have considerable assets or potentially hazardous items, or if you engage in activities that could increase your risk of being sued. This could include owning a pool or a dog that's prone to biting.

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In Michigan, an umbrella policy is actually very inexpensive compared to the extra coverage and protection it provides. You can buy several million-dollars worth of umbrella coverage for a few hundred dollars.

In fact, many experts agree that an umbrella policy is not a waste of money in Michigan. With its relatively low cost and extremely high liability coverage limits, this policy is one of the smartest uses of a driver's money for protecting their family and personal assets.

Here are some key benefits of an umbrella policy:

An umbrella policy provides excess coverage above and beyond what is provided by your homeowners and auto insurance policies. This means it kicks in when the limits on your main policies run out.

For example, let's say your auto insurance pays $300,000 of medical expenses per accident and your umbrella policy is for $1 million. If you are sued for $900,000, your auto insurance would pay $300,000 of the damages and your umbrella policy would pay the remaining $600,000.

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Umbrella policies usually provide roughly $1 million to $5 million of additional coverage, and it is possible to get more if you have lots of assets to protect. This can be especially helpful in cases where costs rise and underlying limits stay relatively stagnant.

Here are some examples of what an umbrella policy could cover:

In general, umbrella insurance will cover you, your spouse, family living with you, and others if included. It can also cover legal fees and expenses if you're sued for an amount beyond your underlying insurance coverages.

If you're wondering who needs an umbrella policy, the answer is anyone who owns a standard homeowners, auto, or watercraft policy. This is because an umbrella policy kicks in after the regular coverage has been exhausted, providing additional liability coverage.

In Michigan, drivers need umbrella policy coverage more than ever, especially with the new auto law that took effect in July 2020. This law means that drivers face the risk of being responsible for hundreds of thousands or millions of dollars in car accident-related medical bills.

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Candidates for umbrella insurance include people who possess considerable assets, potentially hazardous items, or engage in activities that could increase their risk of being sued. This could include homeowners with expensive jewelry or art collections, or individuals who participate in high-risk sports or hobbies.

An umbrella policy is not a waste of money, especially in Michigan where the cost is relatively low compared to the high liability coverage limits. In fact, it's one of the best uses of a driver's money for protecting themselves, their family, and their personal assets.

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You need an umbrella policy if you own a lot of assets, including property or savings, to protect them in case you're sued. An umbrella policy can provide financial protection against lawsuits and accidents that may exceed the limits of your standard insurance policies.

Owning a pool or trampoline, having a pet, being a landlord, or working as a volunteer are all scenarios where an umbrella policy might be a good idea. This is because you may be more likely to be sued if someone gets hurt on your property.

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Having young or new drivers in your household, coaching children's sports, or participating in sports that could cause an accident with others can also put you at risk of being sued. In these cases, an umbrella policy can provide an extra layer of protection.

Here are some examples of how an umbrella policy can protect you:

If you're found liable for an accident, an umbrella policy can cover the difference between what you owe and the amount of your financial responsibility that exceeds your standard insurance policy limits. For example, if you're found liable for $700,000 in pain and suffering and medical bills, and you have $250,000 in liability coverage and a $1 million umbrella policy, the umbrella policy will cover the remaining $450,000.

Protection is a crucial aspect of liability insurance, and umbrella policies are designed to provide an extra layer of protection for your assets. An umbrella policy can help protect your property and savings from lawsuits.

Owning a pool or trampoline, for instance, can increase the risk of accidents and lawsuits. If you're a landlord, coach children's sports, or participate in sports that could cause accidents, you may also want to consider an umbrella insurance policy.

You may be required to have certain limits on your insurance policies before you can buy umbrella insurance. Typically, insurers want you to have $250,000 worth of liability coverage on auto insurance policies and $300,000 of liability insurance on your homeowners policy.

An umbrella policy can protect your dependent children from accidents they cause, including car accidents. It can also cover accidents that occur on rental property you own and personal injury lawsuits arising from slander, libel, defamation of character, and more.

Here are some scenarios where an umbrella policy might be necessary:

If you're found liable for a car accident and owe $700,000 in pain and suffering and medical bills, an umbrella policy can help cover the difference between what you owe and the amount of your financial responsibility that exceeds your auto insurance liability limit.

Crimes can have serious consequences, and it's essential to understand what's not covered under an umbrella policy. If you commit a crime, such as driving under the influence, you won't be covered for restitution.

Intentional acts are also not covered, including sexual harassment and discrimination. These are willful and malicious acts that can have severe repercussions.

If you're found guilty of intentional bodily injury or intentional property injury, you won't be covered under an umbrella policy. These acts are considered crimes and won't be protected by the policy.

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