Umbrella Insurance
In all likelihood, you have heard the term umbrella insurance mentioned in relation to auto insurance but maybe you never really asked around to find out what exactly it was. An umbrella policy is designed to shield you from almost everything that your home and auto insurance policy does not, as well as fill in gaps in coverage when the limits of your regular policies are exhausted.
Look around and you’ll find that so many regular citizens have lawsuits filed against them with the reasons ranging from the frivolous to the justified and have no extra protection to block the plaintiff from going after their personal assets. To protect yourself, you should invest in umbrella insurance.
What exactly is an umbrella policy? It is, plain and simple, excess liability. What this ensures is that when the limits of your other insurance are exhausted, this comes into play. This could be your home or your auto insurance. Depending on the company you hire, you can purchase anywhere from 1 to 5 million dollars worth of excess coverage, sometimes even as high as 10 million.
The amount of coverage you select really depends on your net worth. You might find people buying a policy that is well above what they are worth because the coverage is cheaper to buy.
An insurance company will give you this only if you have home and auto insurance with them already and you will be required to maintain a certain level of liability on the home and auto policies in order to qualify for the excess coverage. There is a minimum amount of $250,000 that you need to have for each one as bodily injury liability, $500,000 per accident, and $100,000 for property damage for your autos, and $500,000 of liability in and around your home.
The coverage is cheap – and you’ll find that maybe $120 every month will provide you with excess liability of $1 million. Obviously if you own more, you pay more but overall, the price you pay is minimal. It’s not just your house or your car, you could have other vehicles including recreational ones like planes or boats and all these could come under one umbrella.
Umbrella coverage works in the following way. Say you ran into someone walking along the road, and the treatment for that injury exceeded what your auto insurance could bear, the umbrella would be used. Say the person concerned decided that he wants to be compensated for the damages and sued you, that’s when the umbrella insurance can be of great use in paying all the fees and the damages in case things do not go your way.
Besides this, you’ll find that it also covers you for many things that have nothing to do with your cars or homes, such as personal injury protection. This includes false arrest, false imprisonment, and malicious prosecution, and wrongful entry or eviction, defamation or even invasion of privacy.
On fact, you might even have a policy that covers you in the event you are a member of an organization and you are sued by the board or any member. You may have to contact your insurance company to see if you have to pay an extra premium for this type of coverage.