An umbrella is used as a shield against the elements, protection from rain and wind when the weather turns sour. In the world of finance, through insurance, umbrellas perform the same helpful function. Umbrella insurance is a form of liability insurance that protects the policy holder from accidents and lawsuits that could generate liability costs beyond what their regular policies cover.

Liability, one’s legal responsibility to pay for damages due to an accident or loss, is part of most insurance policies. When the liability limits of policies prove not to be enough, however, — in case of an accident or lawsuit—umbrella insurance steps in. It provides excess liability coverage above and beyond what regular policies afford.

This kind of liability insurance is important to consider for many reasons. If a driver causes an accident resulting in injuries, their liability pays for any medical expenses, rehabilitative therapy, or lost wages due to the injured party. Any legal fees from lawsuits requiring legal representation are also covered by liability. Medical costs and legal fees, probably the two most expensive services in the country, escalate quickly. When the sum total is calculated, the standard liability in a homeowners or auto policy may not be enough. The liability included in this insurance may suffice if one person is injured, but if multiple injuries are sustained—say in an accident involving a school bus or a highway multi-car collision—more than the standard liability will probably be needed.

With an umbrella policy, the problem of liability is easily solved. For example, if an auto policy has a liability limit of $300,000, and the insured has a million dollar umbrella policy, the limit is actually $1,300,000. An accident, lawsuit, or liability claim will not become an out of pocket expense—the insured will be covered. They could be all right if only one person is injured, but if multiple people sustain injuries, the bills can reach auto policy limits in no time.

Having umbrella insurance could potentially save thousands, and with premiums generally being about $200 a year in Washington, it’s affordable protection. If you would like to learn more about this policy, Homer Smith Insurance can help you assess your needs and determine how much coverage is right for you. Call us at 888-433-0031, e-mail, or visit our website to receive a free quote. We are an independent insurance agency licensed in Washington, Oregon, California, Nevada, and Arizona.

Erin Stork, Homer Smith Insurance