You may have already heard of the term “umbrella insurance,” but a surprising number of people don’t fully understand what this type of coverage is or, more importantly, whether it’s something that could benefit them. To clear things up, we thought we’d put together some frequently asked questions that provide a basic overview of umbrella liability insurance and its many uses.
What is umbrella insurance coverage?
Umbrella coverage is basically an extension of your existing liability policies, such as your car, home or renters insurance. This type of liability insurance features a much higher limit and is meant to supplement claims that go beyond what your existing policies cover. For instance, let’s say you were involved in a tragic car accident that resulted in a lawsuit against you. Your umbrella policy would cover some or all of the damages you’re found legally responsible for (up to the policy limit).
How does umbrella insurance work?
Your umbrella insurance policy does not kick in unless and until you are found liable for something and are subsequently required to pay for damages. This could include bodily injury, property damage and even the costs associated with your legal battle. The policy will begin paying out once you have exhausted the limits on your existing liability insurance coverage or if the expenses you are responsible for are not covered under your other policies. If the amount owed exceeds the limit of the umbrella policy, you would be responsible to pay the excess out of pocket.
Why is umbrella liability insurance so important?
You may view umbrella insurance as just another added expense, but when you think about all the things you’ve worked so hard for in your life – your home, your business, your bank accounts – protecting those things seems like the wise thing to do. Without umbrella insurance coverage, you could potentially lose everything you have due to a lawsuit or other costly liability claim. Many people find that umbrella insurance gives them the peace of mind of knowing that their hard-earned assets are protected.
How much umbrella insurance do I need?
When deciding how much additional liability coverage you need, there are three main factors to consider:
- Your overall risk
- The value of your assets
- Potential future losses
The greater these things, the more coverage you’d want to obtain. Sitting down with an experienced insurance agent will also help you figure out what your specific needs are and how much additional coverage would make the most sense for your situation.
How much does umbrella insurance cost?
Most people are surprised at how affordable an umbrella insurance policy can be. While the specific cost may vary person by person, generally speaking, one can obtain additional liability coverage starting at just a couple hundred dollars. If you’re interested in learning more about umbrella liability insurance or you would like a free, no obligation quote, contact us today.