When it rains it pours is the phrase we hear often. Close your eyes and think about the last near accident you've been in, or even more realistic, think about the last time you've actually been involved in a collision.
Here's my example: A relative of mine was involved in a pretty serious collision a few years ago. He was stopped at a stoplight when a car rear ended him going at a very high rate of speed. His truck was a total loss. He was rushed to the hospital with severe injuries to his back and neck (and I suspect more than that even). After months of physical therapy and a few surgeries he ended up settling with the other driver's insurance company for a large sum. He was never able to return to occupation he went to school for and will have life long pain to his back from the accident.
Now imagine you were in that truck with your spouse and 2 kids. Now imagine you were the other driver and you rear ended a family of 4 because you were distracted while you were driving. Are the liability limits on your auto insurance policy enough to pay for the medical bills for an accident you may cause? Are the limits on your homeowners insurance policy enough to cover an accident that happens at home? What if someone is hurt at the cabin?
An personal umbrella policy gives you extra protection over your homeowners insurance, auto insurance, motorcycle insurance, etc.
There are two main parts you should consider when looking at an umbrella policy.
1. Personal excess liability: This is when you are at fault or deemed negligent. If you were the reason why someone else was injured this pays for the settlement after you are sued. Typically $1,000,000, but you can go much higher.
2. Uninsured/Underinsured Motorist coverage: This gives you protection when another driver runs into you, you are injured and you are not at fault. If you are awarded a settlement for an injury in an accident you first go to the at fault drivers insurance policy (assuming they are insured), then you go to your own insurance policy. If your injuries or anyone in your vehicle has severe injuries and are awarded a settlement that exceeds the liability limits on the first two policies, then you can access the uninsured/underinsured motorist endorsement on the umbrella policy.
Contact Oak Tree Insurance for more details and examples.