When You Need an Umbrella Policy
Personal umbrella insurance is added protection for homeowners and auto insurance policyholders. The purpose of an umbrella policy is to ensure your out-of-pocket expenses are minimal in the event of a catastrophic event. Umbrella insurance is strictly liability protection above and beyond your main insurance plan. It only kicks in when you have additional liability expenses that exceed your main policy’s limits.
For example, let’s say your basement is severely damaged by a flood. You will first submit a claim to the insurance company to cover damages. Unfortunately, often times, the main insurance policy will have limits that leave the insured on the hook for additional expenses. That’s when an umbrella insurance policy can be highly valuable.
Umbrella Insurance Protects Against Lawsuit
When you get into an at-fault accident, so long as you have liability insurance, the insurance company will cover damages to the other person’s vehicle and their injuries, up to an agreed upon maximum amount. The umbrella policy covers liability – or expenses you are responsible for – beyond the policy maximum. That doesn’t just mean expenses to your vehicle or your medical expenses. They also cover money owed in a lawsuit resulting from the accident. If your policy liability maximum is $250,000 and the other driver’s medical expenses cost, say, $500,000, your umbrella policy would cover the difference because the additional amount then becomes a liability expense.
What Umbrella Insurance Doesn’t Cover
Umbrella insurance isn’t standard insurance. You don’t submit a claim to the umbrella insurance company until you’ve exceed limits on your standard policy. So if you get into an accident, you’ll first submit a claim to your main insurance company and, if there are liability expenses left over, you will then submit a claim to the umbrella insurance company. Umbrella insurance also doesn’t cover damage to your property, vehicle, or medical expenses. It is strictly a liability insurance policy.
Why You Should Consider Umbrella Insurance
Umbrella insurance is inexpensive – far less expensive than traditional insurance. It provides excellent protection against massive expenses that your main policy won’t cover. The reason you should purchase umbrella insurance is so all the bases are covered. You will have far less risk. Imagine what would happen if someone is seriously injured in your home and you don’t have enough homeowners insurance to cover all of your guest’s medical expenses. You could be sued for hundreds of thousands of dollars.
Want to learn more about the benefits of umbrella insurance? Contact us today and we’ll teach you more about this valuable type of insurance that is often overlooked.