How to Know if You Need an Umbrella Insurance Policy

An umbrella insurance policy is a great thing to have under certain circumstances, but they’re not for everybody. They provide an extra sense of financial protection in addition to a traditional insurance policy on one’s home or auto. If you’ve been considering this but you’re not exactly sure how to know if you need an umbrella insurance policy, follow these steps to know for sure.

Difficulty: Moderately Challenging

Instructions

1. Evaluate your assets. Umbrella insurance policies are generally designed for people who have a great deal of assets that could be liquidated.

2. Consider an umbrella insurance policy if you own a small business. Small business owners are typically susceptible to lawsuits from unsatisfied clients and customers. With an umbrella policy, the business owner protects their home and other assets in the event of a lawsuit.

3. Purchase an umbrella insurance policy if you are a homeowner. Homeowners often get sued when somebody unknowingly gets hurt or injured on their property. Even uninvited guests have won lawsuits against homeowners after getting hurt on their property.

4. Talk with your insurance agent. You’ve probably got insurance for your home or car and the agent that handles that will be willing to help you determine your need for an umbrella policy.

5. Check the policy premiums. For this kind of policy, premiums are generally inexpensive. But if you end up paying more than what your assets are worth, give the policy a second thought.

6. Feel comfortable with an umbrella policy. This type of insurance offers an added peace of mind by protecting your belongings and your hard-earned money.

Tips & Warnings

• Purchase an umbrella insurance policy in addition to your already existing insurance policies. While an umbrella policy can stand alone as a form of protection, it’s better to have it as a supplement to the financial protection that you already have.
• Make sure your policy covers your legal costs in the event that you are sued. This is one of the main reasons people purchase an umbrella policy because legal costs could be thousands of dollars.
• Don’t purchase an umbrella insurance policy if it doesn’t fit the above qualifications. You could be spending unnecessary money for a policy that you will never use.
• Don’t miss any payments or be consistently late with your premium payments. This could result in your policy being canceled and leaving you vulnerable to lawsuits and other problems.