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Umbrella Insurance Policies

Posted June 29, 2013 | Filed under topic Types of Home Insurance Coverage

Umbrella insurance policies provide additional liability coverage for homeowners, auto, and watercraft owners, providing protection beyond what comes with a normal policy. Such insurance kicks in when the liability offered by other policies is exhausted.

Why is umbrella insurance important?

  1. A person coming to your door slips and falls on an icy sidewalk and bangs their head on the concrete. The injury could be severe and medical costs could exceed hundreds of thousands of dollars.
  2. You slam on your brakes to avoid hitting a deer, and several cars pile into the back of you. Vehicle damage and injuries could add up to a huge amount.

It used to be that such policies were considered only for the rich, but today such policies are much more affordable and being purchased by many people as a guard against financially debilitating lawsuits. In most instances, a $1 million policy can be purchased for $150-$200 a year. Each additional million might cost an additional $100. Prices can vary, so those figures are just representatives.

Buyers can add up to an additional $5 million coverage without breaking the bank. Further, they have that additional coverage to protect them anywhere they go in the world. That way, if medical bills, lost wages, therapy or other expenses go beyond the original policy’s coverage, the buyer is still protected.

While Umbrella policies were originally considered mostly for businesses, those without a business can also benefit should they be in an accident, or if a person is injured on their property.

Umbrella policies do not, for example, cover repairs on the other driver’s car in an accident or medical bills for the policyholder because of the accident. But it will pay the other party if injured because of the policyholder’s negligence.

But do you really need umbrella coverage? Some experts think that anyone with a total of $200,000 in assets should consider such coverage, but others say that the policies are also appropriate for people with even fewer assets.

Also, as more people operate businesses out of their homes, umbrella insurance policies make even more sense. That is particularly true when you have clients coming to your door.

It is a good idea to discuss umbrella insurance coverage with your agent to see if it is appropriate for you. If you have considerable assets, the agent will most likely recommend that you get the coverage.

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