Any insurance policy is a financial tool for its policyholder. Your home insurance policy helps protect you and your home from potential perils involving your home. Auto insurance is there for you should you become involved in an automobile accident. There are many different policies covering everything from RVs to boats, however, each of these policies will come with its own limits as to how much protection you will receive. This begs the question:
What happens when you need more protection than your insurance policy provides?
Coverage gaps are never a welcomed sight, but the truth is life has so many different scenarios that can be thrown your way, to be prepared for more, you’ll need an insurance policy that is built for the unexpected. This is where umbrella insurance comes in.
An umbrella insurance policy is there for your family, your home, and your personal belongings when facing larger than normal losses involving liability or legal-related issues. Although umbrella insurance policies are often associated with affluent individuals, everyone can benefit from additional protection. Suffering at the hands of a lawsuit or an accident involving your liability doesn’t have to disrupt your financial stability. Umbrella insurance is affordable protection that can pay off immensely in the event of a loss.
How Much is Umbrella Insurance in Texas?
On average, umbrella insurance policies in Texas cost only a couple of hundred dollars per year. Considering that policyholders receive at least $1 million in coverage for this low cost, umbrella policies are a great consideration for anyone. Here at Freedom Insurance Group, we work hard to find our clients the best possible coverage for the lowest cost on the market. Our clients save an average of 40% on their premiums when switching.
Why Do I Need Umbrella Insurance?
In Texas, you have two years to file a lawsuit involving a personal injury, with tens of thousands of people injured by negligence each year. There are thousands of automobile accidents to consider, and several others involving watercraft and ATVs. The bottom line is that there are several things that can go wrong and when they do, your umbrella coverage is there to keep you financially protected. Take a closer look at some common scenarios in which an umbrella policy will help you avoid paying substantial amounts of money.
Medical Expenses and Legal Fees
The cost of medical care and legal representation in America continues to trend upward across the board. It doesn’t take much to ring up tens of thousands of dollars in expenses if not more. These are the average figures for a hospital stay according to Debt.org:
Medical expenses are the number one cause of bankruptcy in America, and this unfortunate statistic is sure to continue as costs grow across the board. The costs of staying in a hospital, while high, pale mightily against the eye-popping figures when surgery is required. Again, these figures come from Debt.com, and they paint a picture of how much some of the most common surgeries cost in Texas:
Example: You’re found at fault in an auto insurance accident that has caused the other party to need spinal fusion surgery and you only carry minimum coverage. In Texas, the maximum amount of bodily injury coverage on a minimal auto insurance policy will only provide $30,000 of coverage per person. Based on the average cost of this surgery, you’d still potentially be responsible for $80,000 in medical costs alone. An umbrella insurance policy can step in and provide compensation to protect your assets and avoid out-of-pocket expenses.
Loss-of-Income Due to Injury
If someone is injured and unable to work, you may be found liable for their lost income. Wages of any sort can be a considerable amount for an individual to pay for, but especially in fields where incomes can reach six figures on average. An umbrella insurance policy can mitigate this expense by providing compensation to the affected party so that you don’t have to.
Example: Your child hits someone in their car while they are using a crosswalk breaking their leg. The affected party is an experienced oilfield worker who works offshore and is required to use their legs to complete their tasks. Instead of suing you for compensation or coming after your assets, your umbrella insurance will provide the funds you need to cover their wages.
Restoring Valuable Personal Property
Insurance policies have limits. This cannot be overstated when considering umbrella insurance. It is possible to increase your limit of a home insurance or auto insurance policy, but you will noticeably raise your premiums on the protection you might not use. Umbrella insurance is an inexpensive method of gaining coverage without breaking the bank.
Example: You’ve just crashed your truck into a boat on what was supposed to be a fun day out at the lake. Now you’re staring at a six-figure bill that outreaches your insurance coverages. Umbrella insurance is here once again to help you avoid potential lawsuits and satisfy affected parties when you are liable.
A Civil Dispute in Court
The average lawyer in Texas for civil litigation costs nearly $300 per hour. If you find yourself dealing with a legal issue that is not covered or is not totally covered by your homeowners insurance coverage, the costs of your lawsuit can add up to an insurmountable amount. Thanks to your umbrella coverage, you will be covered and reimbursed for legal fees that go beyond your home insurance’s policy limits.
Example: A civil case between you and a local business is ongoing and now you find yourself being counter-sued. Another example would be a lawsuit between you and your neighbor after their child is injured while visiting your property and jumping into your pool. Legal cases can be drawn out and expensive. Let an umbrella policy help you reduce legal fees so that you have one less thing to worry about during such trying times.
Accidental Damage to Your Neighbors’ Homes
Ideally, everyone has home insurance and enough to cover any losses that may affect their property. But in the real world, this is far from the case. There are at least 3.5 million Americans who do not have home insurance and tens of millions more who do not have an adequate amount of coverage to restore a severe or total loss to their homes. If you cause damage to someone’s home and their policy isn’t able to cover the repairs, or even if it is, if you’re liable they may look to you as the liable party to restore their home. A hot real estate market and skyrocketing construction costs have placed the average home in Texas with a value of over $247,000. Even paying only 5% of this figure can leave you with a nasty five-figure bill if you don’t have umbrella insurance.
Example: Your property catches on fire and quickly becomes out of control. Before firefighters can contain it, the fire spreads to your neighbor’s property and their home. Now, you’re both left helpless having to rebuild your homes, only their home insurance policy has a limit that isn’t high enough to fully restore their loss. If found liable, you may have to foot the bill for the remaining repairs.
These examples are but a few as to what makes umbrella insurance so important. Where your other policies let up, that’s where your umbrella coverage begins, and having the right protection in place can save you serious cash after being liable for the major loss of another.
What Does Umbrella Insurance Cover?
Umbrella insurance policies in Texas will cover you against liability issues surrounding the following:
- Property damage.
- Bodily injury.
- Legal expenses involving civil cases.
When another party is affected and you are liable, your umbrella policy will help protect you financially in these three areas. Each policy is different and umbrella insurance is not blanket coverage. The terms and conditions of your policy should be discussed with your insurance agent.
As important as it is to understand what is covered by your policy, it is also important to know who is covered by your policy:
- You and the members of your household including dependents and your spouse.
- Anyone else you declare on your policy.
Your policy will follow you and the members of your home as a much more affordable option than purchasing additional coverages across different types of insurance.
What Umbrella Coverage Does Not Cover
Umbrella coverage helps fill in the gaps and protects against a wide range of liability perils, but there are still exceptions. These are some of the most common scenarios policyholders may be surprised to find out aren’t covered by an umbrella policy:
- Damage to your home, property, or automobile.
- Business-related liability issues.
- Intentional and criminal activities causing liability for you or a member of your family.
- Flood damage is not covered by an umbrella insurance policy.
- Medical expenses or other expenses not involving an existing insurance policy such as home or auto.
Umbrella Insurance Coverage Limits
Your umbrella insurance policy will provide $1 million or more in protection against liability. The more coverage you purchase, the higher your premium will be. Assessing your potential risk is an important step as you’ll want to have enough coverage to protect your assets in the event you need to pay a large sum of money.
For your umbrella policy to be activated, you’ll also need to have other coverages in place beforehand. Policyholders are also required to carry a minimum amount of coverage from their other policies to be eligible for an umbrella policy. Speaking with an insurance agent can help you navigate coverage limits for your needs as each person’s needs and situation are different.
Affordable Umbrella Insurance in Texas
Being liable for a major loss is a scary place to be, but with umbrella insurance, you don’t have to face this obstacle alone. Freedom Insurance Group works with 25+ A-rated or better insurance brands to compare your coverage needs and find the lowest price on the market. We can bundle your umbrella insurance with a homeowners policy or car insurance for even more savings, and deliver world-class customer service to make the process as easy as possible for you. We’ve been helping the Lone Star State since 2005, and are proud to find the right umbrella insurance policies in Texas for our clients. Contact us about your coverage needs and protect against your liability exposure today.
FAQs About Umbrella Insurance
If you have questions about umbrella insurance, please feel free to reach out to us. We pride ourselves on being a resource on all things insurance here at Freedom Insurance Group, and our agents are eager to help. However, some questions come up more than others, so, we’ve created this FAQ guide to help answer some of your most pressing questions regarding umbrella policies:
Is Umbrella Insurance Worth It?
Peace of mind and at least a million dollars in coverage for only a few hundred dollars each year. Yes, umbrella insurance is a cost-effective way to protect your finances.
How Does Umbrella Insurance Work?
Umbrella insurance is coverage that begins protecting you during liability-related losses after your other policies have reached their limits.
Can I Buy Umbrella Insurance Separately?
No, you’ll need a home and/or an auto insurance policy in place before you are eligible for umbrella insurance.
Can I Deduct Umbrella Insurance?
No, your personal umbrella insurance policy is not tax-deductible in most cases. Business umbrella insurance policies, however, can be written off.