This article will give you the basics about how to know if an umbrella is right for you, how it covers you, how cheap it can be, and what you have to lose. The first thing to know about insurance is that the right amount of insurance is a personal decision. What I have learned from hundreds of client reviews, is that the amount of coverage that makes you feel at ease, is the right amount of coverage for you. Yes your insurance agent, Estate planner or even a family member may tell you how much coverage you should have, but every person has a different risk tolerance.

Before a decision should be made, some facts should be looked at. Such as how much do I have to lose? What is meant by this question is what assets, income, savings, and investments could be lost in litigation if you are found liable for a loss?

First, let’s face some facts. Do people die as a result to car accidents? Do people lose income due to the effects of an accident? Do auto accidents end up in litigation? The answer is a resounding YES. Could it happen to you? Yes again. Pertaining to this new found realization, foresight could be the difference between stability and a life of regret.

If a life is lost, or someone loses their ability to earn an income or provide for their family, litigation may follow. In litigation a judge or jury has the responsibility to determine a human life value for the injured or deceased. This judment could be as high as fifteen to twenty times their annual income. So ask yourself, how many people do you know that make at least fifty thousand a year? If a judge or jury awards the plaintiff twenty times his income, which is a one million dollar judgment, how would you pay this amount if you were liable?

The first response that I hear is bankruptcy. Bankruptcy may or may not be an option. I have worked for an attorney that handles bankruptcy, and personally I do not see how the defendant or the plaintiff benefits from this option. A judge may be able to pursue your homes equity. In the state of Utah a judge can put a lien on anything above twenty thousand dollars per person on the note. Another risk is assets; this would include money in the bank, personal property, and maybe even retirement money. One of the most costly consequences of a judgment could be wages. In the state of Utah a judge can garnish up to fifty percent of your wages until the debt is paid!

One of easiest ways to cover yourself from the risks mentioned is a liability umbrella from your insurance agent. Traditionally personal umbrellas range from one million to five million dollars in coverage. And best of all they can be very cheap. On average my clients are paying around seventeen dollars a month for an umbrella! This amount could easily be covered with a few minor changes to your policy. One change could be raising your deductible. The Idea here is to let your insurance handle the life changing problems and you pay for the door dents and rock chips. A low deductible is the most expensive insurance you can buy. By raising your deductible by five hundred dollars you could usually save enough to pay for a one million dollar umbrella.

A common misconception is that the umbrella only applies to your autos. An umbrella covers all personal liability. This coverage would include claims on your property, in your car and your own personal liability. An umbrella will even hire an attorney in your defense up to your umbrella’s limits. In my experience very few people have their insurance set up to protect themselves from a major liability lawsuit. Please take a couple of moments and review your coverage. This could be the difference between a bad day and a bad life.