Is Personal Umbrella Insurance Worth It In North Carolina

Do I Need Umbrella Insurance? A Guide To What It Is And When To Buy It!

Is Umbrella Insurance Worth It? 

Over 15 million lawsuits happen every year in the United States. People are suing everyone around them left and right nowadays. Keeping that in mind, you want to make sure you’re protected. 

There are many insurance options out there. It can be overwhelming with how many choices you have.  

Today, we will focus on one policy.  

Below we will review the policy and what it protects you from and determine whether or not one would be worth it for you!

Let’s find out! 

What Is Umbrella Insurance?

Umbrella insurance is an invaluable tool for protecting a person or family’s assets.    

Simply stated, an umbrella sits OVER & ABOVE your personal insurance policies.  Unless specifically excluded by the policy contract, the umbrella adds an extra layer of liability over any PERSONAL insurance policy that contains liability coverage (home insurance, auto insurance, watercraft & boat insurance, motorcycle insurance, renters insurance, etc) 

While, in general, an umbrella policy just provides increased limits of liability over the underlying policies you already have…some umbrella policies will provide additional coverage limits for some items that AREN’T covered under those policies (it covers false arrests, slander, defamation, etc.

Keep in mind that umbrella insurance doesn’t cover you. Any injuries or damage to you or your personal belongings is on you. On top of that, it won’t cover intentional or criminal acts. 

When Is It Beneficial To Get Umbrella?

Many activities can lead to a lawsuit. The question you have to ask yourself, can you afford it? So many things can cause a lawsuit that you may not think of. For example, if your dog bites someone it can prompt a lawsuit.  

Here is a list of some reasons to get an umbrella policy:  

  • If you own/rent a home, vehicle, or boat
  • If you coach sports teams for kids
  • If you own a dog or other dangerous animals
  • If you volunteer
  • If you have an average to high amount of assets
  • If you have a high profile profession (Medical, Dental, CEO, Etc)
  • If household income exceeds $100,000 annually
  • If you travel abroad
  • If you own a pool or trampoline
  • If you are involved in sports
  • If you have been in car accidents before
  • If you have had traffic violations
  • If you have a TEEN Driver

Another thing to consider is how many people in your household drive a vehicle. Out of that number, how many of them are 21 years old or younger? The more people driving, and the younger the age of the driver, the higher the chance of car accidents.  

One large settlement is all it takes to wipe out your savings. A lawsuit can leave you in debt for years to come. It could even put your other assets in danger (including any investments you have made, your house, your car, etc.).  

Consider how likely you are to be sued to determine whether you need umbrella insurance. Next, consider how much more coverage you need. Not everyone will need the same amount.  

Maybe you only need to buy the standard policy, but then again, you may need a lot more. The more items you check off the list above, the more umbrella insurance you may need.  

Umbrella insurance starts as a $1 million policy but can go as high as $10 million.  

When Shouldn’t You Buy An Umbrella? 

If you don’t have homeowners or auto insurance then umbrella insurance isn’t right for you. Most places won’t give you umbrella insurance if you don’t have one or both of these insurances.   

If you choose to get homeowners or auto insurance, for most companies it is mandatory to buy a certain amount of it. You won’t get the green light for umbrella insurance until the insurer is satisfied. Based on your needs, the insurer will consider what the right amount of insurance you should own is. 

Typically, you buy all your insurance from the same company. You will get your homeowners, auto, and umbrella insurance from the same company. Some places make it mandatory. 

On the flip side, other companies will offer you a discount. If you buy all your insurance coverage from one place you will pay less.  

Consider the cost of the insurance and what you own. Is the value of your assets low risk or high risk? Is there a greater impact to your income if a lawsuit should arise?  

If the answer is no, then you may not need umbrella insurance.  

Can you afford the insurance? A $1 million personal umbrella liability policy is the standard. Generally, you would pay anywhere from $150-$300 each year. Some insurers will offer even cheaper rates. 

Should you choose to get more coverage, the amount you pay would decrease.  

Moreover, what are the limits of your current insurance? You could increase the liability limits on your insurance. This is a possibility if you don’t want to buy umbrella insurance. 

Depending on how much you may need, it could be more costly to increase your limits. Yet, if you don’t need much more coverage, you should be fine without umbrella insurance.  

Is Umbrella Insurance Worth It?

Now to answer the age-old question, is umbrella insurance worth it? Carefully review the list of reasons people get umbrella insurance to see if it’s right for you. Are you at a higher risk than most?  

There are still so many more types of insurance out there to explore! Review our blog to learn about the types of insurance

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