You probably need umbrella insurance if you have assets over $500,000, own rental property, have teenage drivers, plan to greatly increase your income some day or have a home pool, a trampoline or a pit bull.
Capital Budget Strategies, LLC, Austin’s best Financial Coach, has many ways to help you organize and protect your money, create a Budget and Emergency Fund and help you set up a Snowball Debt Repayment Plan if needed.
The term “umbrella” fits the policy perfectly. Here is how it works: You have auto and home insurance, of course, but what if you cause damage over the coverage limits? For instance, your auto insurance covers you up to $500,000, but what if your teenage son is texting while driving and crashes into a Maserati severely injuring 5 cardiac surgeons heading to a medical conference at Dell’s Children’s Hospital?
Your auto coverage might not even cover the damage to the automobile, so how are you going to pay for physical injuries to the surgeons, their lost wages and potentially career ending disabilities? You could be sued and held privately liable, resulting in having to sell your home, empty your retirement accounts and have your wages garnished forever.
Umbrella insurance kicks in when the limits of your other policies are reached. In the example, you could have $500,000 from your auto coverage, then perhaps an additional $3,000,000 from your umbrella policy. (Policies usually offer coverage between $1 – $5 million).
Umbrella insurance is relatively inexpensive for the extra coverage and peace of mind it offers. Most policies can be purchased for only a few hundred dollars a year.
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