Umbrella Coverage Explained
Good thing you have insurance. But, wait, your policy covers $300,000 of liability, and, in a lawsuit, you’re judged liable for $1 million. That leaves $700,000 left to pay. How will you cover it?
If you have umbrella insurance and your policy covers the incident, the additional $700,000 will come from your policy. If not, it will come from the assets you have now, such as your home and savings, and from future assets, such as your wages or inheritance.
The fact is, it only takes one serious accident and a resulting lawsuit to put everything you own – and will own – at risk. And it only takes one umbrella policy to help protect it all.
Here are a few things you should know about umbrella insurance:
- Personal umbrella policies typically offer $1, $2, $3, $4 or $5
million of liability coverage. Consider your net worth when choosing
your coverage –you could be sued for everything you have.
- An umbrella policy is not a stand-alone policy. Your insurance
carrier will typically require you to meet certain qualifications, such
as having an auto policy with a certain level of liability coverage, in
order to purchase umbrella insurance.
- Even when you have umbrella insurance, your car or home
insurance is your first line of defense. For example, if you are liable
for $2 million in a car accident and your auto insurance covers $500,000 of liability, your auto policy covers the first
$500,000. Your umbrella policy covers the remaining $1.5 million,
assuming your policy covers the incident and that you purchased that
much coverage. If you are liable for $250,000 in an accident on your
property and your homeowners insurance covers $300,000, your umbrella policy won’t be needed.
- If you insure a motorcycle, ATV, golf cart, snowmobile,
motorhome or watercraft, your umbrella policy may provide additional
liability coverage on top of those policies as well. Be sure to check
with your carrier to confirm your coverage on these types of vehicles.
- A single umbrella policy typically covers all of your family members who are residents of your household.
Umbrella insurance also gives you liability coverage in instances where other policies don’t. Examples include driving in a foreign country or renting a boat.
If you’re curious about how umbrella insurance might play a role in protecting the life you’ve built or plan to build, give Bob Lancaster Insurance a call.