What is an Umbrella Policy?

A personal umbrella policy can be a good option for you. It is a type of insurance that will provide liability coverage over and above the auto or homeowners policy. If the liability coverage is not enough to cover the damage of an accident you cause or and incident on your property, a personal umbrella insurance policy kicks in right where your other liability has been reached. By having an umbrella policy, you can be protected when your other insurance is not enough. An umbrella policy provides additional coverage or excess liability above the limits of your basic policies. It can protect you from bodily injury liability claims and property damage liability claims. Umbrella policies also provide a broader form of coverage and can help cover legal fees, false arrest, libel, and slander.

Your umbrella insurance can come into play if you are found liable and need to pay damages, or if you are sued and need to pay for your legal defense, even if the result is that you are not found to be responsible. An umbrella policy only pays once your basic liability limits have been exhausted or the claim is excluded from the basic liability coverage. The claim will be made against you, the policyholder, on behalf of the wronged party. Then your insurance company may pay the settlement amount up to the limits of your coverage. If the settlement amount exceeds your coverage limits, you are responsible for paying the remaining amount out of pocket.

When choosing your coverage limits, there are some things you should consider. Consider the risks that you might face. Consider risks as a homeowner or renter, the risk of causing an accident during your work commute, and any potentially dangerous activities you participate in that could put those around you at risk. Also remember to value the assets you have. These include properties, possessions, stocks, bonds, savings and retirement funds. The more assets you have to protect, the higher the umbrella policy limit you should consider. Since liability lawsuits can results in loss of both current assets and future income, consider potential loss of future income. Even if you have a few assets to protect, you may want to consider the long-term ramifications of a serious claim.

If you have any questions about your current insurance policies or other ones, make sure to contact us. We can advise you on the options you have, as well as recommend the policies that are beneficial for you.