What’s Umbrella Insurance and should I get it?
Topping Up Your Home and Auto Coverage with Liability Insurance
What is Umbrella Insurance?
Umbrella insurance is a type of liability insurance that covers your personal liability on top of the standard liability that you’d take on your personal insurance policies. It is an inexpensive way to protect your financial assets. Umbrella liability can have you covered on several properties and vehicles depending on the coverage you choose. This policy isn’t a stand-alone hence it’s known as a secondary policy, and also familiarly known as a personal excess liability insurance policy. Umbrella insurance also provides added liability protection for lawsuits and claims against you. Personal umbrella insurance protects you above what your base home and auto policies cover.
What Does Umbrella Insurance Cover?
Umbrella liability insurance will protect you in the event of litigation for property damage, injuries, and associated costs if you get sued for damages to other people's property or injuries.
Would I need Liability Insurance If I already have Umbrella Liability Insurance?
Umbrella insurance cannot replace a primary policy, or an underlying liability policy For example, a home insurance policy would provide the primary liability for a loss and once the money in the homeowner personal liability is out, the umbrella insurance kicks in.
Do I Need Umbrella Insurance?
Lawsuits can happen at any time and lawyers are winning more money than ever. What you may not know is that homeowners and auto policies only have liability insurance usually up to $2M. Liability insurance is the part of a homeowners or auto policy that pays for medical bills and lost wages, and legal defense. A standard liability from homeowners or auto policy is often not enough to cover these extra costs.
Almost every state has laws that will hold drivers accountable for bodily injury and property damage from the result of a car accident, and the driver at-fault could be sued for any damages.
If an unfortunate accident should happen that is your fault, be sure to check your liability insurance to cover the cost of negligence. You really can’t predict how much a judge may award the injured individual in a court and umbrella insurance can only save policyholders by providing the right protection at a generally affordable cost.
How Much Does Umbrella Insurance Cost?
A personal liability umbrella insurance policy can give you extra liability protection without too much additional cost. Depending on how much umbrella liability coverage you decide to get, the costs approximately $100-300 for every $1 million in liability coverage. Anything extra in terms of coverage is usually inexpensive.
How Much Umbrella Excess Liability Insurance Do You Need?
Consider your own situation when deciding how much umbrella liability insurance you need. You have to be realistic in what you stand to lose and what risks you are facing in order to determine the right amount of coverage. Ask yourself what risks you have in terms of what your assets are worth and what potential loss from future income you may have.
With Umbrella Insurance, who can benefit?
If you have established assets that you want to protect, you’re going to want to consider umbrella insurance. If you get sued you could lose those assets that you’ve built up over the years and this includes all of your savings in your account and investments. This could add up to a lot and without the right protection, you could be at risk.
If I don’t have a lot of assets, should I still get Umbrella Liability?
Even if you haven’t built out many assets and are just starting out, you never know what the court will award a third party if you are the one held liable for damages. Even when you don’t have any assets, you might be responsible for paying off with future earnings. Yikes!
How Much is covered with umbrella insurance?
Choose the right amount of coverage wisely as the power is in your hands. Umbrella policy underwriting varies from company to company and this will determine if you end up with 1 or 10 million dollars worth of coverage. Depending on your situation and your budget, you’ll want to compare and shop around for rates that are right for you. It’s worth getting a few quotes from your licensed insurance advisor to help you to make an informed decision.
How does Umbrella Policy work and what are the conditions?
In order for the umbrella policy to kick in, a primary liability policy will need must be in place and have maxed out on all of its claim payments. Homeowners, condos, renters policies will offer primary liability whereas cars have several minimum liability requirements depending on the state. You may want to consider increasing your liability limits on the primary policy first followed by adding supplemental umbrella policy. Insurance companies are the ones who will set the underwriting requirements for an umbrella policy. It should state in writing the minimum amount of liability required in order to qualify for the umbrella policy so there’s no confusion over the determined amount.
Umbrella Policy Restrictions
It’s required by some companies to insure all properties prior to offering any type of umbrella coverage. You’ll have some options when it comes to finding an umbrella policy that meets your needs. Keep in mind that the more assets you have, the greater requirements for protection you’ll need.
What Information Will I need to Get Umbrella Insurance or Excess Liability?
Licensed insurance advisors will ask a couple of questions before you can get your umbrella policy:
What are your properties and who insures them?
What are your primary liability limits for the insurance on your properties?
What cars, boats, and recreational vehicles do you own and what are their liability limits?
Are you a member of a board of directors or a non-profit?
Applying for umbrella liability insurance will ask a lot about your assets and how they’re insured in order to get a bigger picture of the type of coverage you’ll need. If you have a claim, the umbrella liability insurer will have the information needed in order to help you.