Protect Your Wealth With Umbrella Insurance

By: JG Chambers


You donít need wealth to need protection from an expensive, personally damaging lawsuit. People have become quite litigious and not just towards those with real wealth.

​Whether you are someone with loads of possessions and cash assets, or a person of average means, you can easily become the target of a lawsuit. Umbrella insurance will become your best friend in this event for the following reasons.

Umbrella insurance is ďan everything under the sunĒ policy. As liability insurance, an umbrella policy will protect you from lawsuits in two ways. First, it will cover events not covered by other personal policies. And second, it will give coverage above the limits of other insurance.

Protecting your income and personal assets is a basic wealth building principal. An accident not of your own doing can result in a lawsuit that will strip away personal assets. Umbrella insurance is an inexpensive way to protect yourself.

At this point, you may think umbrella liability isnít for you. You donít have a business, donít work from home, and live a quiet life by all means. But, here are common events that can happen to anyone:

Your friendly pet dog bites someone at the park or bites a neighbor's child when the child sticks a hand through your fence.

Youíre mowing the lawn and the mower throws a rock that hits a neighbor in the eye causing permanent damage.

Youíre celebrating the Fourth of July at home with friends and a firecracker injures one of your guests.

During a normal Saturday golf outing, you slice a drive and hit another golfer in the head.

A delivery person slips on your driveway and breaks an arm.

All of these are rather normal circumstances that can quickly lead to litigation, regardless how careful you are. And, with each one you can easily be held personally liable.

If a lawsuit results from an accident on your property and you donít have the assets to pay damages, either from cash savings or other insurance, you may end up paying from current income as you continue to earn it.

Some state laws could even consider retirement savings as payment for damages, too. And donít forget, you'll still have legal bills stemming from defense of the lawsuit.

The typical homeowners insurance policy has from $100,000 to $300,000 liability coverage. However, most people choose on the lower end or less of that amount, thinking theyíll never use personal liability coverage. In reality, a situation creating a lawsuit can easily bring hundreds of thousands of dollars in personal damages against you.

Your personal umbrella coverage really should fall between $300,000 and $500,000 or more for basic protection. The following facts offer good reasons for carrying more protection:

About 15% of personal injury awards are $1 million or greater.

Itís estimated that around 20% of people with large assets do not carry umbrella liability insurance.

$1 million of personal umbrella protection will only cost between $150 to $300 per year. For every million after that, youíll pay about $50 to $75 more dollars.

There are over 15 million civil suits in American each year and the plaintiff wins over 55%.

Still donít think youíll ever need personal liability coverage? Remember the example of your dog biting the neighbor child above? Think about possible award damages if the child is permanently scarred. And, it doesnít matter that the parent wasn't around when the child stuck their hand through your fence.

Or, what if the golfer struck by your errant drive ends up in a coma? Many thousands of golfers are hit on courses each year, and while personal fault isn't automatically placed upon the person hitting the shot, the truth is medical damages bring lofty settlements from lawsuits.

The fact is that umbrella liability insurance is some of the most affordable protection you can buy. And if you think that youíll never need it, you should think again.

​Adding more personal liability protection to an already existing homeowners policy is easy and affordable. Also, your automobile insurance carrier will offer more liability protection at low-cost. Itís always a good decision to consider bumping up coverage under a personal umbrella liability policy.​​

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JG Chambers has been a private investor and personal finance expert for over 30 years. He actively manages a legacy trust, Fairford Equity Trust, with holdings in Dividend Growth Equities, REITs, Oil & Gas Royalties and Utilities.

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