Updated: Feb 5, 2021
I understand that paying for insurance is probably your least favorite thing to do. But as you get older, you realize just how important it is. It protects the things that are important to you. Things you've worked hard to have. So let me give a couple of examples of 1. what an umbrella policy is and 2. what it does for you. Please be reminded that these are examples only and there are other factors that could come into play such as proving negligence, etc.
First, in a previous blog I noted that liability insurance is required by the state of Minnesota to be legal to drive on the roads. Liability insurance, to put it simply for now (there is more to it for sure, but for now I'm going simple) basically protects everyone else from you. It applies the same way with a homeowners policy and liability. Examples of both of these: Auto - if you hit black ice and slid into someone else, causing damage to their car, your liability covers the damages to their vehicle. Home - If I come over and I'm having a grand old time running through your yard (trust me, that would never happen as I don't run and if I am running, something is chasing me for sure, but for example purposes....) and I trip in a hole in your yard and break my leg in 4 places, your liability is what I'm going to go after. Liability explanation in the simplest terms - again, please remember I use these only as examples and there is more to it, but I digress (and for the record, please don't let something chase me because I don't run...)
So, lets say in the same auto accident, gosh forbid you kill someone. Their family is going to go after you and your insurance. If you are carrying 100/300 liability limits, that means the MOST your auto is going to pay per person is $100,000 or per incident $300,000. Anything over that is coming out of your pocket. Okay, same scenario on the homeowners, say I'm running (hahahaha), hit that hole, break my leg and then hit my head on that ginormous rock you have and suffer significant brain damage from traumatic head injury. Guess what? My family is going to go after you and your homeowners insurance. And let's say you have $300,000 liability limits. That's the most that your homeowner's will pay. And yep, you guessed it, anything else is coming out of your pocket. Either of these scenarios could cost you assets you have, could garnish wages for the rest of your life, etc to pay for the million dollars they are suing you for. Read that again, especially you young folks that say "I don't have any assets" - FOR THE REST OF YOUR LIFE. If you're 21 years old, that's a long time. If you're 60 years old, you've had time to build assets. Regardless of age, it's not a good scenario. Unless you happen to have another $900,000 or $700,000 laying around, you're going to pay. (And if you do, let's be friends!)
Enter the umbrella policy. Now, after your auto policy pays out the max of $100,000 and your homeowner's pays out the max of $300,000 your umbrella kicks in. A typical umbrella policy is for One Million dollars (yes, you heard me say it in the famous Austin Powers movie line. If you didn't you do now.) There are many options and amounts, but we'll use the One Million Dollars. So after the $300,000 or $100,000 pays out, you now have up to that one million to cover those additional costs. And as an added bonus? An umbrella policy covers everything you carry liability limits (hence "umbrella") all in ONE policy (commercial policies not included - they have their own umbrellas). So for that atv, or that fancy boat you lost because you thought you had coverage - liability covered.
So, for a low premium (most are lower than your auto premium) you just covered everything you carry liability on! So yes, you could go without, take the risk of having to pay for something for the rest of your life, possibly losing everything you worked for to save a couple hundred bucks a year OR you could get an umbrella policy and not have to worry! One last added bonus? Multi-policy discounts! IT CAN LOWER YOUR PREMIUMS ON OTHER POLICIES!! Extra coverage that could bring your other premiums down? Yep, I said it.
Again, we Protect What's Important! And what's important to us is to make sure you are protected. I don't see a down side here! Talk to your agent today! If you see me, I'll even draw you a picture to explain it even better, or confuse you more because I can't draw. But hey... Let us Protect What's Important to you!