Do I Need “Umbrella” Insurance in California?
A few years back, I was in an auto accident. I suffered minor wounds—a broken nose and orbital lobe—and was in the hospital for a total of 19 hours.
During my time there, I had x-rays and blood tests taken and received the standard care for my injuries. I was not admitted overnight, and did not require extensive treatment. However, when I received the bill for my time at the emergency room, it was over $47,000. Imagine if I would have hit another individual and the amount of damages done surpassed the amount of bodily injury liability limits on my auto insurance policy. The bill could have had a significant, negative financial impact on me. This is where umbrella policies come in. When your liability insurance is tapped out, umbrella coverage is there to act as a backup.
Medical payments are expensive, particularly in the state of California. When your medical funds are tapped, it’s important to have something else in place to act as a backup. The same is true for liability coverage. Umbrella insurance offers extended coverage that goes above and beyond your typical policy limitations.
How much umbrella insurance is necessary? A $1 million policy is the lowest option. However, it’s important to review your liquid assets and determine your coverage limit accordingly, as more than $1 million may be needed to make sure your policy will cover everything you own. When it comes to bodily injury coverage, you must have a minimum of $250,000 in place in order to add a $1 million umbrella policy.
You don’t want one accident to wipe out your entire future and everything you’ve worked so hard to establish. Covering yourself with an umbrella policy will ensure you have safety nets in place when needed.
If I don’t own assets or have income, do I still need an umbrella insurance policy?
The common pushback we hear when it comes to umbrella insurance is a person telling us that they don’t have any assets to protect. They don’t have the high income that they assume is needed for an umbrella policy.
What they do not understand, is that in California, if you’re at fault or negligent and in need of more coverage, then a judge can garnish your wages, or go after future earnings.
So while you may not need an umbrella policy today, you may be in a place where you make more money or acquire more assets in the future.
If you have questions about adding umbrella insurance, I’d love to discuss those with you. If you’re ready to make a change to your policy, click here.
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