Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance. She has mastered the art of boiling down complicated financial topics for readers to understand.
Why You May Want to Increase Your Insurance Coverage
By Britt Erica Tunick
If you own a home or a car then you also likely have insurance coverage –if for no other reason than the fact that auto insurance is legally required for anyone who owns a car, and banks require proof of homeowner’s insurance before they will issue a mortgage. Simply having insurance, however, doesn’t mean that you have adequate coverage, particularly given the fact that insurance policies have caps on the amount that they will pay under different circumstances.
If you are a homeowner with a secondary property, whether a vacation home or a rental unit, something you should give serious consideration is an umbrella insurance policy. Umbrella policies are secondary forms of insurance that limit your personal liability against any lawsuits that may be filed against you. The policies take their name from the fact that the additional coverage they provide is in addition to the caps on any homeowner, auto, boat or any other type of personal insurance policies that you have.
Since the coverage provided by umbrella policies is only triggered if the coverage on your primary insurance proves insufficient to pay off any claims against you, such policies are relatively inexpensive. For example, a two-million-dollar policy covering a rental unit, your home and autos will typically cost less than $1,000 per year.
While shelling out an extra $1,000 each year may not seem like an appealing idea, the peace of mind provided by such coverage can be priceless. Given the extremely litigious nature of society today, it is not uncommon for people to file lawsuits for the most minor accidents –in some cases, even those that are the result of their own actions.
Given that such lawsuits often prove successful, if the combined value of your property holdings and possessions far exceeds the amount that your primary insurance covers, an umbrella policy is something you should give serious consideration to.
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