April Showers Bring Umbrella Insurance

The added liability protection you didn’t know you need


An old wives tale once said, “April Showers Bring May Flowers” and as we begin the typically rainy month, we knew we couldn't help to think about how much umbrellas really do protect us. After all, umbrellas aren’t just for keeping us dry.


What are we referring to? Umbrella Insurance.


Quite simply, umbrella insurance can protect your assets and future earnings from expensive lawsuits. Umbrella Insurance policies increase the liability limits beyond the coverage offered by simple auto and homeowners policies.


Think of umbrella insurance (which is sometimes referred to as excess liability insurance) as extra protection for your savings and other assets. If you’re sued for damages that exceed the liability limits of your car or homeowners’ policies, an umbrella policy will help pay what you may owe. In some cases, it provides coverage that’s not included in the base insurance policies.


Who Needs Umbrella Insurance?


While Umbrella Insurance is not required, it’s commonly purchased by individuals who:

  • Own Property
  • Have significant savings
  • Are worried about liability claims when traveling outside the United States
  • Own things that can lead to injury lawsuits such as pools, trampolines, and dogs (always check with your insurance provider to confirm that the dog breed is covered)
  • Participate in activities that increase your chance of being sued such as participating in sports where an injury is a possibility or coaching a kids’ sports team.


Since a lawsuit can wipe out not only your current savings but also what you stand to earn in the future, a case can be made that everyone needs umbrella insurance. Even if you don’t have the money to cover a settlement right now, if sued, you could be stuck paying off debt for years to come.


How Does Umbrella Insurance Work?


Think of umbrella insurance as a fail-safe for your savings and other assets.


Let’s say you run a red light and accidentally hit another car. Not only is there significant damage to the vehicle, but several people are also injured. The car needs $50,000 in repairs and hospital bills come to a total of $250,000. On top of that, the driver of the other car broke his arm but because he is a doctor, he sues you for $200,000 in lost earnings.


If you have umbrella insurance, it would pay the difference between what your primary insurance covers and what you still owe. In this situation, you may have to pay $200,000 out of your own pocket after the liability coverage in your car insurance policy.


How Much Umbrella Insurance Do You Need?


It’s important to purchase a policy that covers your net worth. This should include your savings, other assets, and total income. You may want to include potential income if you’re likely to earn more in the future.


It’s difficult to pinpoint how much umbrella insurance is the “right” amount because it’s unknown how much a potential lawsuit could cost you.


Call your local Gaudette Insurance agent today to discuss the best umbrella insurance policy to protect you from future rainy days.