Introduction to Umbrella Insurance
Umbrella coverage is essentially additional liability insurance that extends the policy limits of your auto or homeowners insurance protection. If your current liability coverage isn't enough to fully pay for someone’s damages for which you are at fault, whether it is a car crash or some kind of accident in your home, this is where umbrella coverage can greatly help in averting potential financial disaster.
Who needs it?
No matter the conventional wisdom, a person need not be rolling in the proverbial dough to enjoy the benefits of good umbrella insurance coverage. Simply owning a home and also being the main breadwinner is sufficient enough to justify having this extra added protection. You might fall asleep while driving and then be at fault for a crash that leads to a huge claim or, perhaps, your gravity challenged Aunt Betsy might take a spill off the deck and break a hip. Without sufficient coverage, everything you have worked to accumulate can be jeopardized. Often the standard auto or homeowner’s coverage will pay out the initial $300,000. The challenge is that anything above and beyond that amount you are personally liable to pay.
What it does
In addition to the above description, good umbrella coverage will also safeguard a policyholder from certain perils that are not covered by a standard homeowner’s or car insurance policy. Examples include:
• Malicious Prosecution
• False Arrest
• Mental Anguish
If you are the target of a lawsuit, you will no doubt face huge legal expenses. This is true even if you win the lawsuit. Lawyers are expensive, but with a typical umbrella policy, the insurance provider will appoint a legal team on your behalf to work your case and will also pay for such things as court costs and for the lawyers too. If you're found guilty and there is a substantial judgment against you, your umbrella coverage will protect you with a payment for any judgment amount that exceeds your underlying coverage. (This, of course, is limited to the maximum amount of your umbrella coverage as well.)
How it works
Umbrella coverage comes in $1 million increments. Depending on your past record, the first million dollars of umbrella coverage will normally cost around $300 per year. Each additional $1 million of coverage will likely cost another $100 or so.
Keep in mind that it only takes a moment in which your eyes are off the road or where someone hurts themselves on your property to know how important good umbrella coverage can be. Speak with an insurance agent today for more information.