Umbrella insurance operates as extra liability insurance on top of the liability coverage that you already have. If there’s a major claim or lawsuit, this coverage might be triggered. If your policy limits on your automobile, home or boat insurance become exhausted, your umbrella coverage steps in and picks up right where your primary policy left off.
What does it cover?
Your umbrella is excess coverage for injuries or damage caused by you or any additional insured under your policy. It can even cover certain wrongs like libel or slander.
The advantages under your umbrella
Umbrella coverage starts out at a minimum of $1 million. Policy limits can be increased too. It also provides additional costs of defending you in a lawsuit.
An example of how it works
You’re in a high-speed motor vehicle collision that’s your fault, and the driver of the other vehicle spends six weeks in the hospital and needs lengthy rehab. Your auto liability policy limits are $300,000, but the damages suffered by the other driver will surely be in excess of $300,000. Your auto policy agrees to pay the $300,000 but there are still $600,000 of outstanding damages. That’s where your $1 million umbrella coverage kicks in. You’re completely covered.
Who needs umbrella insurance?
If somebody is hurt through your negligence, your home, investments, savings, retirement accounts and other assets are all up for grabs if they take a judgment against you that’s in excess of your policy limits. There’s no reason to place those assets at risk when umbrella coverage is available. Even the average Joe needs an umbrella policy.
Cost of umbrella coverage
You’re looking at about $200 a year for a $1 million of umbrella coverage. You’ll need to have specific liability coverage amounts on your auto and home insurance, but that’s coverage you’ll want anyway.
Go ahead and inquire about an umbrella policy on top of your liability coverage. You might not think you’ll ever need it, but if you do, it’s going to be there.