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Step 1
Evaluate your personal situation. Do you have a teenage driver? Do you own your home? Do you like to throw parties and have guests over? Do you have a pool? If you answered yes to any of these questions and have any significant assets or a retirement fund, I would highly recommend purchasing a personal umbrella policy. ---Imagine your teenager accidentally runs a red light and hits another vehicle causing the driver of the other vehicle to be paralyzed for life, his family sues you and gets a judgment for $750,000, the limit of your automobile policy is $300,000…what now? You are now personally responsible for the remaining $450,000…there goes your house, savings and retirement fund…unless you have a personal umbrella policy.
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Step 2
You should also consider purchasing a personal umbrella policy if you have a high profile career or sit on the board of a civic, charitable or religious organization (unlike a homeowners policy, personal umbrella policies provide coverage for personal injury suits resulting from libel, slander, defamation, false arrest, etc…)
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Step 3
Finally, lawsuits are costly. A personal umbrella policy can provide coverage for legal expenses such as attorneys’ fees and court costs (provided it is a covered claim under your umbrella policy) that may not be covered under your automobile or homeowners policy.
