You've carefully chosen the coverage levels on your home and auto policies so you should be protected against every possible risk correct? Unfortunately not. Your existing auto and homeowners insurance may not be enough to protect your nest egg in the event of an expensive lawsuit.
Are you at risk? Recent statistics show that $500,000 is the national average for payouts in an auto liability case and $900,000 is the average for a property liability case*. In addition, 25% of all $1,000,000 or higher payouts are in the State of California (yes, we are a lawsuit-happy state). Even if you are ultimately deemed to not be at fault, chances are you will incur a large attorney bill just defending yourself.
Here's an example - let's say you, or someone in your household, is involved in a car accident. You are determined to be at fault and the person you injured sues you. We'll assume you carry $100,000 in bodily injury protection on your auto policy, however, you are ordered by the court to pay $500,000 to the injured party. Your auto policy will pay the first $100,000 but where does the additional $400,000 come from? Your home, any other real estate holdings, your vehicles, other personal property, your savings, investments and other liquid assets might all need to be liquidated in order to satisfy the court judgement.
What if you have no assets and your net worth isn't enough to cover the judgment against you, do you still need insurance? YES because 25% of your future earnings could also be at risk and be garnished under court order.
Have young drivers in the house? Not only are they more at risk for an accident but 25% of their future earnings could also be garnished if they are deemed to be at fault in an accident. Not to mention that YOUR assets are at risk.
An umbrella liability policy offers an additional layer of protection over and above your auto, homeowners, condo or renters policies so you are protected both at home and in your vehicle. You work hard for everything you have so why wouldn't you want to protect that nest egg?
Umbrella Liability policies usually range from $1,000,000 to $5,000,000 in coverage and are fairly inexpensive (a couple of hundred dollars per year on average for a $1,000,000 policy). Re-evaluating your existing policies, getting all the discounts you're entitled to or raising your deductibles slightly can very often cover the added cost and is well worth it.
Simply put, not having an umbrella policy is like jumping out of an airplane without a parachute. Why risk everything you've worked your whole life to build? Once you have an umbrella policy, you will wonder how you ever lived without one.
*Source: Current Awards Trends in Personal Injury - 48th Edition. Copyright 2009 by LRP Publications, West Palm Beach, FL. http://www.lrp.com
Call your insurance agent to see if you are properly protected. If they are not familiar with umbrella policies or do not seem genuinely concerned about protecting your assets, then find an agent who is. Protect what matters most!
Article Source: http://EzineArticles.com/?expert=Kathy_Lamm
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