When you begin to think about how to achieve financial security, a few basic things probably spring to mind: insuring your car and your home; invalidity insurance in the event of injury and incapacity for work; life insurance to protect your family in case something happens to you. But there is one important type of financial protection that many people overlook: umbrella insurance.
“We’ve found that a lot of people don’t understand umbrella insurance, or mistakenly think it’s something that is only needed by the very wealthy,” said Jon Bloom, vice president, personal auto, Erie Insurance. “The truth is, the vast majority of people with other types of insurance would benefit from this extra layer of protection, and it is available at a cost much lower than many people assume.”
Umbrella insurance provides coverage beyond the limits of other insurance policies, such as auto and homeowners. But industry experts say there are lingering myths that prevent many people from getting it.
Myth # 1
My auto insurance policy will cover me for anything that goes wrong.
Reality: A tragic car accident that results in life-changing injuries could require treatment that costs way more than your auto policy limits, and you may have to make up the difference.
Myth # 2
My home insurance policy will pay if someone is injured on my property.
Reality: Home insurance can pay up to your policy limits, but like a car accident, if someone is in a catastrophic accident on your property, the costs could exceed your policy limits. Umbrella insurance also protects against lawsuits for other things unrelated to the injuries. For example, if you write a post on social media that is interpreted as damaging someone’s reputation, or if you sit on a nonprofit board or coach a youth sports team and someone ‘un takes legal action against you. Ask your insurance agent about the wide range of scenarios that may affect you.
Myth # 3
I will not be sued – this only happens to people who have a lot of money.
Reality: The truth is that in today’s litigious society, anyone can be sued, and if you are responsible for someone’s injuries that are beyond the limits of your other insurance policies, or if you are sued for other reasons, your home and other financial assets could be at risk.
Myth # 4
Umbrella insurance is expensive.
Reality: You might be surprised to learn how much coverage you can buy for a modest cost. For example, Erie Insurance claims that most of its customers can purchase additional $ 1 million in coverage for less than $ 20 per month.
When it comes to protecting your family’s financial future, some things are taken for granted, like auto, home, and life insurance, but it’s worth looking beyond the obvious. The best thing to do is talk to your insurance agent to make sure you have the right coverage. Chances are, you’ll decide that umbrella insurance is coverage you can’t afford not to have.