If you have auto and homeowners or rental insurance, you may feel protected from any situation that may arise. However, when it comes to liability that can cover you if personally sued, it is more unpredictable as medical expenses are all over the place and there is no agreed value on someone's health and/or happiness. Because of this, you could easily exceed the coverage limit of your home or auto policy and be left paying the difference.
How does a New Hampshire Umbrella Insurance Protect my Assets?
An umbrella policy typically can serve as excess coverage over your home, auto, boat or any other recreational vehicle on which you have purchased insurance. If you have a property, vehicle, recreational vehicle or boat you choose not to insure, then you would essentially have a very large deductible up to whatever the minimum liability limit is required by the umbrella policy. This is usual.
All insurance policies have limits. With many home and auto policies having a maximum liability limit of $500,000, assuming you purchased this high of a limit, this may not be enough should a serious accident occur. If you are found legally liable for an accident your home or auto policy will pay up to the policy limit and then walk-away once those limits are exhausted. You could then be required to pay the remainder out of your own pocket. If you have a New Hampshire umbrella insurance policy, then you could have an additional $1 million or more in liability protection.
What are some umbrella claim examples?
Driving in the New Hampshire winter, you glance down at your phone and do not see the car in front of you stop. You crash into them, causing a multi-car accident with multiple injuries. Because you are found at-fault, you are then held legally liable for the damages to the other vehicles, as well as for the medical expenses, loss of income and pain-and suffering of the passengers. Your auto policy pays the policy limits but not all claims have been settled. In this situation, an umbrella policy could then kick-in and pay up to its policy limit, providing an additional $1 million to $5 million of extra coverage depending on the limit purchased.
If you have a swing set or swimming pool, you’re carrying excess risk. If a neighborhood child comes over to play and is injured in your backyard, you may be found liable and be required to pay medical costs and other fees. An injury such as a broken spine can cause lifelong disability, which your homeowners insurance may not able be able to cover entirely. With umbrella liability coverage, your legal fees and settlements could be covered, reducing your out of pocket charges.
It is impossible to predict every situation you may encounter. You may find it hard to believe that your beloved pet could not only bite someone but cause hundreds of thousands of dollars in injuries, or that your teenager would throw a party that quickly gets out of hand with injuries and damage to others’ property. However, families are forced to face these situations every day. An umbrella policy helps plan for these unplannable situations providing up to $5 million worth of liability coverage.
Why do I even need to carry insurance if I have an umbrella policy?
As agents, we have often been asked to reduce the amount of liability coverage someone has on their auto or home insurance to the minimum, or remove it entirely, as they believe the umbrella policy provides enough protection. The oversight in this assumption is that umbrella insurance companies require minimum liability limits be purchased on the underlying policies. This is frequently $250,000 per person, $500,000 per accident on a personal auto, boat or recreational vehicle, and $500,000 in liability coverage for any residence owned. If you choose to reduce or remove the coverage below what is required in the contract, you have essentially given yourself a huge deductible.
For example: You have a $1 million personal umbrella policy. You have a car insurance policy that has Bodily Injury (BI) coverage at $100,000 per person and $300,000 per accident, but the umbrella company requires BI at $250,000 per person and $500,000 per accident. If you have a serious accident and are sued for $750,000 in BI for one person's injuries, you would be required to pay $150,0000 first before the umbrella policy would pay the additional $500,000. Ouch!
Even worse, if you have an umbrella policy and also have a boat that you decided was not worth insuring, you could be in even more financial trouble if involved in a serious accident. Again, the umbrella serves as additional protection over the underlying boat policy. If there is no underlying boat policy, you would be responsible for whatever limit should have been in place regardless if it was or not!
These underlying limits can vary by insurance company and policy so be sure to check with your umbrella carrier before making any coverage changes to any liability limits.
Why you need an umbrella policy:
For families across NH, a single accident could prove to be financially devastating, despite having insurance coverage. If the damages exceed the limits of your policy, you will be forced to pay the rest out of pocket, even if that means selling your home and draining your savings. Umbrella insurance can help prevent this situation, extending your coverage beyond the typical limits, while still remaining affordable. This insurance can protect you when your other insurance falls short.
For more information about New Hampshire Umbrella insurance, visit the HPM product page.
This material is for informational purposes only. All statements herein are subject to the provision, exclusions, and conditions of the applicable policy, state and federal laws. For an actual description of all coverages, terms and conditions, please refer to the applicable insurance policy or check with your insurance professional.