Once you’ve got your comprehensive auto and homeowner’s insurance policies in place you’re completely covered against losses relating to your car and home, right? Unfortunately, that’s not necessarily the case.
Homeowner’s and auto insurance policies are subject to maximum coverage limits, so they wouldn’t cover you completely if you’re ever subject to a claim that exceeds your maximum coverage. So if you’re ever subject to a large claim, your personal assets could be subject to loss to cover that claim. Sometimes the best approach in protecting yourself isn’t to get more homeowner’s or auto insurance, but to purchase an umbrella insurance policy instead.
Here is some basic information and insurance advice about umbrella coverage.
1. What is Umbrella Insurance? An umbrella insurance policy provides you with extra liability coverage above and beyond your primary insurance policies. For example, your homeowners insurance may have a $500,000 or $1,000,000 coverage cap on claims arising out of personal injuries that occur in your home or on your property. But it’s not unheard of for a personal injury claim to exceed that amount. Umbrella insurance can cover some or all of the amounts that aren’t otherwise covered by your existing policies.
2. Aren’t My Existing Policies Enough? It’s true that you have liability coverage in your auto and homeowners insurance policies, but those policies caps on the total payout. This means that even if a claim is covered by your existing policy, the amount of the claim might not be. Imagine if you (or anyone else covered by your auto insurance policy) cause an accident that results in several people being seriously injured – your current policy simply might not have a high enough claim cap to cover these damages. Furthermore, chances are good that your existing insurance policies exclude certain personal liability situations – claims which could be covered by an umbrella policy.
3. How Much Coverage Should I Get? Obviously the question of how much umbrella coverage you want to consider is going to depend on your personal financial situation. Obviously the more assets you have, the more you need to protect. The starting point should be for you to examine your current levels of coverage on your existing homeowners and auto insurance policies.
4. How Much Will Umbrella Insurance Cost? The cost of an umbrella insurance policy will depend in large part on your driving record and prior liabilities. The worse your driving record, the higher you may expect your premiums to be. Still, because umbrella insurance coverage supplements your other policies, and is not your primary coverage, you can expect to pay somewhere around a few hundred dollars per year for $1,000,000 in umbrella coverage.
5. Where Can I Get Umbrella Insurance Coverage? If you’re interested in learning more, the first place to check is with your current insurance company. Not only will you already be familiar with their way of doing business, you may be able to obtain a discount by virtue of having multiple policies with the same company.
As with any other type of insurance, umbrella coverage is one of those things you purchase and hope you never have to use. But if you are ever subject to a significant personal liability, you’ll be glad you have it.