An umbrella insurance policy is defined as an additional level of liability insurance coverage that exceeds the limit of the insured’s house, car or watercraft. Umbrella insurance adds an extra layer of security to people who find themselves at risk of being sued for damages caused to others in an accident or damages done to property. This insurance also provides protection against defamation, damage, invasion of privacy and slander.
Umbrella insurance policies add additional value when the insured is sued and the monetary limit of the policy has been exceeded. The extra protection offered by the insurance is very useful to those who own a lot of assets and are at risk of being sued.
Why Get Umbrella Insurance if I Have Liability Insurance?
Umbrella insurance is not a core form of insurance. This means it requires the main policy to pay initially pay out on a claim before the umbrella liability coverage can become active.
What Sort of Protection Does Umbrella Insurance Offer?
With umbrella liability insurance, you are protected from:
- Lawsuits as a result of property damage and injury
- Additional legal defense costs as a result of a lawsuit relating to an injury inflicted upon others and damages done to the property.
Why Do I Need Umbrella Insurance?
Today, the news is filled with tales of multiple lawsuits and record-breaking sums of money being awarded out.
As a home and automobile owner, there are limits to the liability insurance you can purchase. Liability insurance is defined as the part of a homeowner’s home or auto policy that covers expenses like an injured person’s medical bills including therapy and wages lost due to negligence.
In your insurance policy, the liability section covers the cost of a legal defense representative if said negligence causes the individual at fault to be called to court. Also, after summing up all the medical fees for the injured and the legal fees of the negligent party, standard liability coverage is not usually enough.
Umbrella insurance provides that extra layer of protection so that taking care of the bills arising from issues like turn out to be less of a hassle.
What is the Cost Implication of Having Umbrella Insurance?
It is possible to procure a personal liability umbrella insurance policy without having to break the bank. It all depends on how much umbrella liability coverage you choose to purchase. It could go for prices as low as $150 for a year to over a million dollars for coverage and increase yearly depending on existing coverage.
To procure additional liability insurance is not expensive especially when compared to the value of the coverage being purchased. Paying $150 – $200 for coverage worth $250,000 could be the best deal you will ever make.
How Much Umbrella Insurance is Enough?
Umbrella insurance isn’t too expensive, but it is an added cost. In order to determine how much coverage you need, and how much you’re willing to pay for it, you need to go over your own financial situation.
Important Questions You Need to Ask about Umbrella Liability and Risk
- What is the value of my assets?
- What is the potential loss of future income?
- What risks could I face?
Possible Beneficiaries of Umbrella Insurance
Beneficiaries of umbrella insurance could be just about anyone. But the group of people who are likely to have umbrella insurance are individuals who have assets they wish to protect. This is because people like them have a higher chance of losing huge chunks of money in a lawsuit.
Getting sued could cause you to lose assets you may have worked hard to get. These include investments and the entirety of your savings.
Can I Purchase Umbrella Liability Without Money or Assets?
If you do end up getting sued, the court will award benefits to the plaintiff should you be held accountable for damages. And if you have no assets, you could be forced to pay for the damages with money you haven’t even earned yet. A student working towards a degree and planning to pay off his or her student loans with his earnings may need to go back to the drawing board if found guilty in a case like this.
How Much Coverage Does Default Umbrella Insurance Have?
When purchasing umbrella insurance, you get the choice to choose the amount of coverage you would like to have. The policy underwriting changes with each insurance company and coverage could vary from a million dollars to tens of millions of dollars. The difference here is simply you and your budget.
Some companies could also double, triple or quadruple the coverage from a million dollars to two, three or four but would not do the same for the cost of the coverage. Because of this, consider getting quotes from multiple companies before making your final decision.
Are There Any Conditions for Owning an Umbrella Policy?
For an umbrella policy to begin paying coverages, there must be a primary liability policy that must have hit the maximum threshold on payments. A lot of umbrella insurance policies need a minimum underlying insurance. Most insurance companies set the underwriting terms for an umbrella policy. The wording will then state the minimum amount of liability needed before one can qualify for an umbrella policy.
Are There Any Limitations on Umbrella Policies?
Yes, there are. And these limitations usually vary from insurance company to company. For some companies, you may be required to ensure all your properties with them before umbrella coverage can be offered to you. Some even go on to add umbrella coverage as an add-on to an existing policy.
Other companies may attempt to offer you an umbrella policy as a separate policy and this is why you should peruse the market before making any decisions. The more assets you own, the greater the need for you to protect yourself. To get this done, you could consider working with a specialized insurer to get the most value for your money.