What is umbrella insurance?
As a responsible adult, you probably have insurance for your car, home, and health. But what about those unexpected events that exceed your coverage limits? That's where umbrella insurance comes in.
What is umbrella insurance?
Umbrella insurance is a type of liability insurance that provides additional coverage beyond what is covered by your primary insurance policies. It is designed to protect you from major claims and lawsuits that could potentially bankrupt you.
How does umbrella insurance work?
Let's say you're in a car accident and the other driver is injured. Your car insurance policy has a liability limit of $100,000, but the other driver's medical bills and lost wages exceed that amount. Without umbrella insurance, you would be responsible for paying the difference out of pocket. But if you have umbrella insurance, it would kick in once your primary policy limits are exhausted and cover the remaining costs up to the limit of your umbrella policy.
What does umbrella insurance cover?
Umbrella insurance typically covers the following:
- Bodily injury liability
- Property damage liability
- Personal injury liability
- Landlord liability
It can also provide coverage for certain situations that may not be covered by your primary insurance policies, such as libel and slander.
Who needs umbrella insurance?
Anyone who has assets to protect should consider umbrella insurance. If you have a high net worth, own a business, or have a high-risk occupation, you are more likely to be sued and should have additional liability protection.
Even if you don't have a lot of assets, umbrella insurance can provide peace of mind and protect your future earnings from being garnished to pay for a lawsuit.
How much does umbrella insurance cost?
The cost of umbrella insurance varies depending on the amount of coverage you need and your personal risk factors. Typically, you can expect to pay around $150 to $300 per year for a $1 million policy.
Where can I buy umbrella insurance?
Umbrella insurance is usually sold by the same companies that offer your primary insurance policies, such as your auto or home insurance provider. You can also purchase umbrella insurance through an independent insurance agent.
It's important to shop around and compare quotes from multiple providers to ensure you're getting the best coverage at the best price.
Conclusion
Umbrella insurance is an important type of liability insurance that can protect you from major claims and lawsuits that could potentially bankrupt you. It provides additional coverage beyond what is covered by your primary insurance policies and is designed to protect your assets and future earnings. If you have assets to protect, consider purchasing umbrella insurance to ensure you have adequate liability protection.
