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When you’ve spent a lifetime building assets to achieve your financial goals, the last thing you want is to see those assets wiped out by a lawsuit.
Accidents happen every day, but parents face more risk when their teenagers get behind the wheel, especially in today’s lawsuit happy environment.
Many parents don’t realize that if their teen is not yet of age of maturity (at least 18), then they can be held liable for damages caused by any accident.
In fact, young drivers (ages 15 to 24) make up only 14% of the U.S. population, but they’re involved in over 30% of vehicle accidents that result in injury, according to a study of the economic burden of injuries.
This is why it’s worth looking at your insurance coverage and deciding if umbrella insurance is needed.
What’s Umbrella Insurance?
An umbrella policy adds an extra layer of insurance protection over your automobile or homeowners insurance. Like an umbrella in a rain storm, umbrella insurance protects your personal assets in an event that a major claim exceeds the coverage limits of your other insurance policies cover.
How an Umbrella Policy Could Work?
Let’s say your teen driver was involved in an accident and the other driver’s injuries are severe enough that they have been hospitalized, need ongoing physical therapy, can’t work and have experienced tremendous pain and suffering. They are suing for $1 million.
If the limits on your automobile policy cover a maximum of $250,000 for the accident per person, where would you come up with remaining $750,000?
If your teen is found liable, you will be responsible for the settlement money which means the courts could possibly take your home, vehicles or even your have your wages garnished.
That’s where umbrella insurance can help, covering the additional costs when your underlying insurance isn’t enough. This extra policy can help protect your bank account, home, and other personal property.
How Much Coverage Do I Need on My Umbrella Insurance?
Everyone’s financial situation is unique, so it’s important to work with an experienced professional to review your current policies and determine how much extra protection you need.