Umbrella insurance, also known as excess liability coverage, is a type of insurance that provides additional protection above and beyond the limits of your standard homeowners, renters, or automobile insurance policies. Umbrella policies can provide coverage for personal injury claims, such as slander or libel, as well as property damage claims.
One of the primary advantages of umbrella insurance is that it can provide peace of mind in the event that you are sued for a large amount of money. For example, if you are involved in a serious car accident and are sued for $1 million dollars, your standard automobile policy would likely only provide coverage up to the limit of your policy. However, if you have an umbrella policy with a limit of $1 million dollars, then you would be fully protected from this lawsuit. Keep reading to learn more about umbrella insurance, including what it covers and how it can benefit you.
What is umbrella insurance?
Umbrella insurance is a type of supplemental insurance that can provide additional coverage in the event that you are sued for more than the limits of your homeowners or automobile policy. Umbrella policies typically provide $1 million to $10 million in additional coverage, and they can be purchased for a relatively low cost.
One of the main benefits of umbrella insurance is that it can help protect your assets in the event that you are sued. For example, suppose you are involved in a car accident and are sued for $2 million but only have $500,000 in liability coverage on your automobile policy. In that case, your assets could be at risk. However, with an umbrella policy, you would be covered up to the $10 million limit provided by your policy.
Umbrella policies can also provide coverage for things like libel and slander, as well as personal injury claims made by guests at your home. Additionally, umbrella policies can provide excess liability protection for businesses. Most insurers offer umbrella policies as standalone products, but they can also be added to existing homeowners, auto, or business policies.
How much coverage do you need?
Umbrella insurance is extra liability coverage that can help protect you from financial losses if you’re sued for damages. Umbrella policies provide an additional layer of protection beyond the limits of your homeowners, auto, and other underlying insurance policies. The amount of coverage you need depends on your individual risk profile. If you have significant assets to protect, or if you regularly engage in activities that could lead to a lawsuit, such as skiing or sailing, then it might make sense to purchase a policy with a higher limit. Keep in mind that umbrella policies are relatively affordable, so it’s always better to have too much coverage than not enough.
How much does umbrella insurance cost?
The cost of umbrella insurance depends on several factors, including the amount of coverage you desire. Depending on the coverage you need, your driving record, credit score, and the state in which you live could also impact your insurance costs. Similar to any other policy, an insurer will evaluate your risk as a policyholder and use that to influence your premium rate. Generally speaking, umbrella policies cost between $150 and $300 per year for every million dollars in coverage.
Altogether, umbrella coverage is an important type of insurance to have. It can provide additional coverage for a person in the event that they are sued for a large amount of money. This type of insurance can help to protect a person’s assets in the event that they are found liable for damages that exceed their primary insurance coverage. In general, it is a valuable type of insurance to have.