Congratulations you spent the last few decades working hard to pay off your mortgage, and build a sizable retirement account. Your assets are now worth close to one million dollars. Life is good, and retirement is just around the corner.
Until, one day, an unfortunate accident occurs, and you are now being sued for injuries and damages. Most auto insurance policies, offer liability coverage for either 300,000 or 500,000 per accident, but damages in a lawsuit can easily add up to millions of dollars. A million dollar lawsuit can leave you responsible for the remaining balance after your auto insurance pays out your liability coverage. If you do the math, your portion of responsibility can range from 500,000 to 700,000 dollars. This scenario is a nightmare no one should have to endure.
This is where having an umbrella policy can help keep a massive lawsuit from wiping out all your assets. Umbrella insurance takes over when other policies run up against their coverage limit. So anytime you run over the liability limits on one of your other insurance policies, your umbrella policy will take care of the extra costs.
Get the right amount of coverage and don’t skimp. Coverage that is equal to your current net worth is the standard recommendation. However, you may wish to factor in your profession and aversion to risk. Having an umbrella policy is an inexpensive way to protect your assets and future financial security.
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