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Many people with auto and
homeowner's insurance wonder if a personal umbrella policy (PUP) is really necessary. If you own property or have other assets, you should strongly consider umbrella insurance.

A PUP covers a much higher limit and goes above and beyond liability directly relating to your home, boat, jet ski, RV, golf cart and auto. The main purpose of your umbrella policy is to protect your assets from an unforeseen event, such as a tragic accident in which you are held responsible for damages or bodily injuries.

You don’t have to be a millionaire to need that much coverage. For example, say you’re hosting an outdoor dinner party and a balcony collapses, injuring several people. If those people are unable to work for a few months, you could be responsible for their unearned income, along with any medical bills. This can quickly add up to more than the $100,000 or $300,000 liability limits on your homeowners policy.

The personal umbrella policy would kick in at this point. It is designed to save you from major claims and lawsuits. As a result, it helps protect your assets and your future. Without a PUP, you could be stuck paying the remaining balance of a claim out of pocket.

Underlying liability limits must be 250/500 on auto and $300,000 on home. An umbrella policy only pays once your basic liability limits have been exhausted. The claim will be made against you, the policyholder, on behalf of the wronged party. Then your insurance company may pay the settlement amount up to the limits of your coverage.

The average personal umbrella policy with limits of $1 million typically runs about $380 annually. Considering that 13% of bodily injury liability settlements are $1 million or more, an umbrella policy is definitely worth it.

You may also cover your business with commercial umbrella insurance. Similar to a personal umbrella, a business umbrella policy picks up where your business auto liability, general liability or other liability coverage stops. Rather than increasing total limits, umbrella insurance is an inexpensive way to provide extra coverage.

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