I don’t know why I haven’t blogged about this already (oh wait, yes I do – because it’s B-O-R-I-N-G!), but we’ve had this umbrella policy going on about 8 months now. Ever since moving to VA and having about 10 billion + 1 people at the exact same time kept asking if we had any. That’s when I know it’s time to pay attention to stuff – when the universe keeps pushing it in your face! ;)
I don’t care too much to go into the details of it all since, again, it’s not that sexy, but here’s a nice description of what umbrella insurance is from Daily Finance:
An umbrella policy provides an additional layer of insurance, typically $1 million or $2 million, above your auto insurance and your home insurance liability coverage.
And then they share a rather vivid example of how this may come in handy:
“After attending a Christmas party, my client got involved in a fatal auto accident where the other driver was killed… My client was given a breathalyzer on the scene and exceeded the legal alcohol limit. He was sued for something like $1.25 million by the claimant’s family and was legally liable for the damages, which were paid by the umbrella policy. The client was otherwise an upstanding citizen with no past history of these kinds of events.”
Now, I obviously have no plans on killing anyone in the near future OR drunk driving (IDIOT!!!), but the point here is extremely clear: umbrella insurance covers you from all those nightmare “what if” scenarios. Which are scenarios usually outside your control and/or unfathomable.
The article then continues on and talks about someone falling down your stairs and suing you, or your balcony collapsing at a party, or even someone bringing a lawsuit against you for defaming them on Facebook! Hah! You never really know with people these days…
Now, would I care about this much as a single bachelor on the prowl every Friday and Saturday night? Probably not… (Although my net worth would be a lot higher! Haha…) But seeing how I now have babies to feed and a beautiful wife to support, as well as a house, multiple cars, savings accounts, retirement accounts, web properties, etc etc, you can bet your sweet ass the risks are more worth protecting. You don’t worry about this kinda stuff if you don’t have anything to lose.
As for the costs, well, it’s actually a LOT less than you’d normally guess. At least if you’ve never looked into it before. That same article says the average rate for $1 Million in coverage is about $200. And we got it for exactly $212.91 – of course through my beloved USAA. Which comes out to roughly $17.74/mo. Is that worth the additional peace of mind? For us, yes. For you, perhaps not.
At the end of the day though – just like with everything else in *personal* finance – it really does come down to your own personal decision and situation. I do encourage you to at least think about it for a hot second though before moving on to the next shiny thing on the ‘net. It’s not fun, I’ll give you that, but it is an option to be aware of if you’re looking for additional protection of your ass-ets (ya see what I did there? ;)).
I’ll leave you with one other tidbit from the Daily Finance folks before signing off for the day… Can you tell I liked their article?
“You may be assuming that if you don’t have $1 million to lose, you don’t need an umbrella policy. Unfortunately, if you are sued by someone who falls down the stairs at your home or whom you injure in a car accident, you can be sued for more than just what you have in the bank. Your retirement funds, investments, savings and even your future earnings are at risk if a judge allows someone to garnish your wages to pay off a settlement. In some states, the equity in your home can be part of the judgment and you would be forced to sell your home to pay someone who sues you.”
Sweet dreams! ;)