Umbrella Insurance

If you are involved in an accident that’s your fault, whether it’s a car accident or something that happens in your home, your insurance should cover you for it. But what if the accident is so serious that the damages exceed your coverage limits? You could wind up on the hook financially, unless you have an umbrella policy.

What is it?

Umbrella insurance is a type of secondary coverage that provides extra liability insurance above and beyond your auto and homeowners insurance. In some instances, it may act as the primary coverage if your other insurance excludes coverage for an incident, such as libel or slander.

Who is it for?

Anybody can benefit from having umbrella coverage, but it is especially important for homeowners and people who have a lot of assets that could be at risk from a lawsuit.

How does it work?

Say you get into a serious car accident that injures another person. That person winds up in the hospital and racks up $300,000 in medical bills. It turns out that you have a coverage limit on bodily injury in your auto insurance policy of $250,000. If you have an umbrella policy, it would kick in at that point and pay for the additional $50,000 that is above your policy limit. If you think your umbrella coverage might be needed, it’s a good idea to contact your insurer to see about the steps for filing a claim.

Types of coverage

Umbrella policies are all very similar and typically cover the same types of liability, including personal injury, property damage and instances of libel or slander. Policy limits usually are in the range of $1 to $ million, but you may be able to get more coverage if you are willing to pay for it.

Major benefits

The top benefit of umbrella insurance is the additional liability coverage you get, which covers you should an accident you are responsible for cause damages that exceed the limits in your other policies. Another benefit is that umbrella policies are relatively cheap for the amount of coverage you get.


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