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| Umbrella Policy |
In this article, we will talk about something that is important to everyone, which is How Does an Umbrella Policy Work?
A number of clients have recently asked me about umbrella policies and whether they are necessary. If you want to protect your assets from an unexpected lawsuit, you probably need an umbrella!
Take the example of driving in a strange city late at night. It is raining and dark outside, and you're not sure how to get back to your hotel. While listening to your GPS system, you stop at an intersection and look both ways. The traffic is clear, so you turn. In the middle of turning, you're suddenly confronted with a drunken pedestrian. You can't stop in time and end up hitting him. Panic flows through your body as you imagine the worst.
Perhaps the pedestrian will ask you to pay for lost wages and medical bills. A pedestrian's family may sue you if they are disabled and unable to work as a result of their injuries and they are the breadwinner. How much of the injured party's claim would your auto insurance cover? In the event that your auto insurance failed to meet their demands, would you have other assets at risk? Would your home, bank accounts, retirement plans be at risk?
In Illinois, if you have the minimum auto liability limit, it will only pay the injured party a maximum of $25,000. If they need surgery as a result of the accident, this probably won't cover those costs. You may face a lawsuit and your assets may be at risk if the injured party hires an attorney to sue you. You may also be garnished in order to pay your settlement.
Are you willing to let the court deduct money from your paycheck to settle a lawsuit? Or maybe force you to sell your house to settle with the aggrieved party? Are you willing to liquidate your bank account to settle with the aggrieved party?
Even worse, if the person dies and leaves a family, you have to take into account that they don't have a primary wage earner right now. This places a huge financial burden on the family and the courts can hold you accountable.
You can add a blanket liability policy to give you additional liability coverage at the lowest annual cost. Most umbrella policies start at $150 per year for a coverage of $1 million. This type of insurance policy protects your assets from lawsuits and protects you from unnecessary stress from unfortunate circumstances.
Perhaps the pedestrian will ask you to pay for lost wages and medical bills. A pedestrian's family may sue you if they are disabled and unable to work as a result of their injuries and they are the breadwinner. How much of the injured party's claim would your auto insurance cover? In the event that your auto insurance failed to meet their demands, would you have other assets at risk? Would your home, bank accounts, retirement plans be at risk?
In Illinois, if you have the minimum auto liability limit, it will only pay the injured party a maximum of $25,000. If they need surgery as a result of the accident, this probably won't cover those costs. You may face a lawsuit and your assets may be at risk if the injured party hires an attorney to sue you. You may also be garnished in order to pay your settlement.
Are you willing to let the court deduct money from your paycheck to settle a lawsuit? Or maybe force you to sell your house to settle with the aggrieved party? Are you willing to liquidate your bank account to settle with the aggrieved party?
Even worse, if the person dies and leaves a family, you have to take into account that they don't have a primary wage earner right now. This places a huge financial burden on the family and the courts can hold you accountable.
You can add a blanket liability policy to give you additional liability coverage at the lowest annual cost. Most umbrella policies start at $150 per year for a coverage of $1 million. This type of insurance policy protects your assets from lawsuits and protects you from unnecessary stress from unfortunate circumstances.
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