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Buying an Umbrella to Protect Your Home

Million dollar coverage for homeowners

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    NEWSLETTERS

    It's called umbrella insurance and it protects you and your family from lawsuits. NBC 7's Consumer Bob reports on the new insurance option on July 18, 2014.

    More and more homeowners are buying umbrellas -- but not the kind that protect them from the rain. Instead they are buying umbrella insurance policies with coverage that starts at a million dollars.

    “I want to protect what I’ve spent my entire career building,” said Terry Kaltenbach.

    He pays for a $2 million policy so he can sleep better at night.

    “If someone comes and stumbles in your driveway or something like that and you get sued, it attaches to your homeowner policy and covers all the way up to the limits of the policy,” explained Kaltenbach.

    An umbrella policy kicks in where your automobile and home policies end.

    Attorney Gary Quackenbush said umbrella insurance is a very affordable way to extend liability coverage on multiple assets.

    “Because it raises the limits if there is a claim that exceeds your existing policy limits,” said Quackenbush, “you’d be covered.”

    State Farm agent Walt Waggener said a $1 million policy can be as cheap as $200 a year, depending on factors like the number of cars, drivers and rental properties. A $2 million policy often runs around $400.

    “The umbrella policy shouldn’t be purchased for the amount of your assets,” said Waggener. “The umbrella policy should be viewed as a wall of protection between whatever assets you have and those people who would like to take them away in a lawsuit.”

    Waggener told NBC 7 his agency has seen two losses among his clients where a $2 million policy helped save his clients’ home or income. One involved a traffic accident and the other a boating accident; in both cases the settlement exceeded the maximum limit of the individual car and boat coverage.

    “The umbrella policy gives you a lot more money with which to pay for the other person’s problem,” said Waggener.

    Financial experts suggest people with dual incomes exceeding $100,000 with a home should consider buying an umbrella policy. Even renters could consider a policy if they have a substantial income. An umbrella could also come into play if the homeowner owns a dog, swimming pool, trampoline, tree house, play set or an ATV -- anything that could invite a lawsuit.

    “It’s a way to avoid bankruptcy,” said Gary Quackenbush.

    He said homeowners should consider getting coverage at least two or three times their assets.

    “There’s no magic number,” said Waggener, “It’s just a good idea to have more of it than less of it.”