What Is an Umbrella Insurance Policy?
An umbrella insurance policy is auxiliary liability insurance coverage that extends beyond the limits of the insured's auto, homeowners, or watercraft insurance policy. Consider umbrella insurance as an extra layer of protection to individuals who are at risk of being sued for damages above their policy limits in the event of an accident, libel, vandalism, slander, or invasion of privacy.
Key PointsUmbrella insurance is a personal liability coverage that extends the insurance coverage of your homeowners or auto insurance offers.
Umbrella insurance is available to those currently covered by a homeowner's, auto, or watercraft policy first; the umbrella policy kicks in after the initial policy has been exhausted. Umbrella insurance is designed to protect those with considerable assets or those who engage in potentially hazardous activities, hobbies, or businesses with an increased risk of being sued. |
How an Umbrella Insurance Policy WorksThe additional coverage that an umbrella insurance policy provides is beneficial to high-net-worth individuals with many high-value assets and are at a greater risk of litigation. Small business owners can use an umbrella policy to protect against monetary damage awards from lawsuits.
Bundling your umbrella insurance policy with the same insurer that provides you auto, home, or watercraft insurance could save you money on the policy. While umbrella insurance policies vary, the average policy requires that you have homeowner's insurance of $250,000 to $300,000 and auto insurance coverage of $150,000 to $250,000. |
Excess Liability InsurancesUmbrella insurance is considered excess liability insurance. Suppose a policyholder is held liable for damages exceeding the liability limits of their homeowner's insurance, car insurance, watercraft insurance, or other coverage. In that case, the umbrella policy is engaged to pay the difference.
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Umbrella insurance can provide coverage not included in a traditional insurance policy; false imprisonment, libel, and slander are examples.
Purchasing umbrella insurance might make sense if you are engaged in any of the following:
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The average cost of a million-dollar personal umbrella insurance policy is $150 to $300 per year but check with your insurer for an exact quote.
Umbrella Insurance - How it worksTo understand how an umbrella insurance policy can protect you, consider the following situation.
If a car owner runs a red light and hits another vehicle, there could be significant damage to the vehicle and possibly multiple injured occupants. Suppose the other car repairs cost over $50,000 and the treatment of the injured surpasses $500,000. In that case, the at-fault driver could be held personally liable for expenses that go beyond the insurance coverage limits. The umbrella insurance policy picks up the additional liability costs beyond the limits of car insurance coverage. |
Call Kelly Lee Insurance to learn more about Umbrella Insurance (337) 656-2890.
