What You Need to Know About Umbrella Policy Coverage
Need extra protection? You might want to consider an umbrella insurance policy. This is a type of policy that provides you with additional insurance, usually a million or two, above your existing home and auto insurance liability coverage.
What is Umbrella Policy Coverage?
Protecting your assets and your family is of the utmost importance - that's why you have insurance. But what if you're not carrying enough insurance? That's when you might want to consider an umbrella insurance policy. It's a type of policy that provides insurance policy coverage over and above what you're carrying on your homeowners' policy or your auto insurance, and it kicks in when the limits on those other policies have been reached.
How Does It Work?
Imagine that you're in a car accident, and another driver has been injured. Say that your insurance will cover the harm done to the other driver to the tune of $250,000. But your insurance isn't enough. The other driver's injuries are so severe that $250,000 isn't going to cut it. He could sue you, and your personal assets could be at risk. Say he's suing you for a million dollars, because he's going to be unable to go to work for six months - your insurance policy coverage will cough up $250,000, but where in the world is that other $750,000 going to come from?
An umbrella insurance policy can cover you, so you don't end up having to pay out of pocket for a huge amount of money.
Why Would You Need Umbrella Coverage?
Think about this situation - in New Jersey, an underinsured driver ran over a policeman who was writing out a ticket at a routine stop. The driver ended up having to pay a settlement, and also legal fees. If he'd had umbrella liability insurance, he wouldn't have been out of pocket.
And this one - in Florida, a claimant was awarded 1.76 million dollars after she and her child were injured in a wave runner accident. Who do you suppose ended up on the hook for the costs? The guilty party who didn't have umbrella liability insurance.
What Types of Claims are Covered?
Most umbrella liability insurance claims are due to car accidents, but they can also cover accidents that occur in the home - imagine that you're having a party, and your deck collapses or someone falls down your stairs, or has an accident in your pool. Umbrella insurance policy protects you.
You're also covered for damage to yourself if you have an accident while driving or boating in another country.
Umbrella liability insurance even covers you against lawsuits for defamation of character or slander, and will indemnify you if you make a bad decision when you're sitting on a non-profit board. And if you're a blogger, or if you like to rant on Facebook, umbrella insurance policy can protect you if someone decides that your comments have harmed them.
What If You Have No Assets?
You might be saying to yourself, “No one can collect if they sue me, because I have no assets.” The fact is that you can be sued for a lot more than what you actually have. Not only can your wages be garnished, any equity you have in your home can be part of a judgment. And you can also be on the hook for assets that you might accumulate down the road. So don't ever assume that not having anything right now means that there's nothing that can be taken - umbrella liability insurance is great protection against future eventualities.
An insurance company will recover a certain level of insurance policy coverage on both your home and auto insurance policies before they will consider an umbrella insurance policy - usually, you'll have to carry $300,000 in personal liability, bodily injury, and property damage on your homeowners policy, and $250,000 per person for bodily injuries and $500,000 per accident on your vehicle policy.
Usually, the rate for an umbrella insurance policy worth a million dollars is about $200 per year - and that's cheap peace of mind.
Know Your Options
Most of the time, you can get umbrella liability insurance in increments of a million dollars, up to five million. It covers lost wages and attorney costs. It's not a type of insurance that's required, but it can definitely increase your level of protection in the event of an accident.
Our insurance agent can give you a quote on a personal umbrella insurance policy, and if you already have other types of insurance with your company, you may even qualify for discounts on your umbrella liability insurance. This is a type of insurance that's well worth considering. Contact one of our licensed agents today for an umbrella insurance policy coverage quote.