Homeowners insurance will help to cover any losses if your house is damaged or burglarized. Health insurance helps to cover the costs of expensive medicines or treatments. And life insurance offers financial protection to your family if you pass away. If you have purchased any such insurance policies, then you're on the right track towards protecting your financial future. However, you should also consider purchasing an additional umbrella insurance policy.
Umbrella coverage is an additional layer of insurance coverage protecting you against liability. There are occasions in which you may find that the costs of a certain mishap far exceed the limits of your normal insurance policies. Although such an event may be rare, it can be financially devastating if you do not have additional umbrella coverage. For instance, if you are in a car accident that is deemed to be your fault, it could lead to a lawsuit from the opposing driver. Although your basic auto insurance covers the damage to the vehicles, you may have to pay for court costs and possible rewards and damages brought on by the lawsuit. You could be forced to pay those costs out of your current assets and even future earnings.
There are many other situations in which you can be at risk of a lawsuit. For instance, if you ask a neighbor to help repair your roof and the roof collapses, your insurance may cover the damage, but not the medical bills for your injured neighbor. If your neighbor then decides to sue you for putting him or her at risk in an unsafe area of your property, you could face paying for court fees, medical bills, pain and suffering, and more. For those rare but serious incidents in which your regular auto and homeowners insurance are not enough, umbrella insurance is there.
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