At one time, Umbrella Insurance was typically a policy purchased by the wealthy. Not anymore. In today’s highly litigious society, where legal fees and settlement costs resulting from a personal lawsuit can easily run tens of millions of dollars, Umbrella Insurance has become a necessity for nearly every policyholder.

“Homeowners, auto and watercraft policies have a limit on liability insurance,” says Dale Krupowicz, Vice President of the VIP Personal Services Division at The NIA Group and Kornreich-NIA. “If you are sued or found negligent of causing an unfortunate accident, chances are defense costs and settlement fees will exceed your policy limits. Without Umbrella Insurance, your personal assets could be seized to pay for these after your liability insurance has been exhausted. ”

How Does Umbrella Insurance Work?
Umbrella Insurance provides added liability protection that exceeds the limits on your home, auto and watercraft policies. It’s affordable, too. In a typical household with two cars, a standard Umbrella Insurance policy providing $1million in added liability protection costs about $300 a year. Limits can go as high as $50 million, depending upon the insurance company.

Middle Income Earners: The Most At Risk
“While I advise virtually all my clients to invest in Umbrella Insurance, it’s especially critical for middle income earners,” notes Krupowicz. “Unlike the very wealthy, this demographic typically does not have large cash reserves on hand to cover legal fees and personal damages once liability protection runs out. Without Umbrella Insurance, their assets are in constant jeopardy. For the amount of added liability protection one receives, in exchange for paying a low premium, investing in Umbrella Insurance is worth it.”

Who Should Purchase Umbrella Insurance?
Krupowicz usually recommends that anyone who owns a home and two automobiles invest in at least $1 million of added liability protection. You are also at added risk if you:

• Own watercraft.
• Own a shore home.
• Travel internationally (coverage is applicable to non-business activities that occur globally).
• Have young drivers in your household.
• Have a swimming pool.

Other Recommendations:

Krupowicz recommends the following:

• When purchasing Umbrella Insurance, make sure you carry at least the minimum liability limit required on your automobiles and homes to avoid any costly gaps in coverage. If you don’t know the minimum limit required by the Umbrella policy, check with your insurance representative.
• Review and update your Umbrella and Home/Auto/Watercraft Policies regularly. Consider increasing your limits when you take on additional exposures, such as purchasing a new boat, moving to an affluent neighborhood, or making significant enhancements to your home. You may need additional protection.
• Obtain Excess Uninsured Motorist Protection along with your Umbrella Insurance. This option provides a financial cushion should you have a car accident with a driver who has little or no insurance. Check to see if this additional coverage is available from your insurance company.

Questions? Interested in Purchasing Umbrella Insurance?
Contact:
Your NIA or Kornreich-NIA insurance advisor or Rick Bingham at rbingham@kornreich-nia.com or 212.850.0107 ext. 4060.