• About Us |
  • Follow Us: 
theinsurance411.com logo

The Insurance 411

What you need to know about insurance

  • Homeowners Insurance
  • Auto Insurance
  • Life & Health Insurance
    • All Life & Health Topics
    • Affordable Care Act (ACA)
    • Group Disability Insurance
    • HSAs
    • Life insurance
    • Long Term Care Insurance
  • Personal Insurance Basics
  • Specialized Personal Policies
    • All Specialized Personal Policy Topics
    • Boat Insurance
    • Motorcycle Insurance
    • Travel Insurance
    • Umbrella Insurance
  • Essential Property and Liability Insurance
    • All Property & Liability Topics
    • Business Income Insurance
    • General and Auto Liability
  • Specialized Insurance Policies
    • All Specialized Prop & Liability Topics
    • Credit Risk
    • Cyber Insurance
    • Directors & Officers
    • Employment Practices Liability
    • Environmental Liability
    • Professional Liability
    • Surety
    • The Basics
  • Workers’ Compensation Insurance
    • All Workers’ Comp Topics
    • Claims Management
    • Controlling Costs
    • Loss Prevention
    • Regulations
    • The WC Basics
  • Employee Benefits
    • All Employee Benefit Topics
    • Affordable Care Act – “ObamaCare”
    • Benefits Management & Compliance
    • COBRA
    • Dental Insurance
    • Group Disability Insurance
    • Retirement Plans
    • Vision Plans
    • Voluntary Benefits
Top Personal 411 Stories
  • | Ten Reasons to Buy Long-Term Care Insurance Now
  • | Life Insurance 101: What Happens When a Policy Matures?
  • | End-of-Life Planning
  • | Ten Tips to Make You a Better Healthcare Consumer
  • | Protect Yourself from Identity Theft

Umbrella Policies: Rainy Day Protection

July 6, 2014 by Leave a Comment

Bad things happen: that’s why people buy auto and homeowners insurance policies. But America’s love affair with lawsuits means your coverage could fall short. That’s where umbrella policies come in. They provide a convenient and surprisingly affordable extra layer of protection for your key assets.

Umbrella Insurance

Umbrella insurance gives you higher limits, broader coverage.

What happens if you are sued for causing an auto accident or your neighbor slips and falls on your property? If you are found liable for causing serious injury, the sky-high cost of medical treatment, lost work time and possibly pain and suffering damages could quickly exhaust the coverage limits on those policies. For instance, say you are found liable for $1 million in damages and your policy limit is $500,000. Your insurer would pay up to $500,000 after you meet the deductible, but you would be on the hook for the rest. Virtually everything you own would be available to pay off the debt.

That’s where umbrella policies come in. The coverage begins once you reach the limit of your underlying auto or homeowners policy (whichever applies), up to the policy limit, usually $1 million or $2 million. In the example above, your homeowners insurance would pay out $500,000 and your umbrella policy would pay the remainder.

Premiums usually cost between $200 to $300 a year for $1 million of coverage. Your actual cost depends on such criteria as the amount of coverage, the insurance company issuing the policy and your own “personal risk factors,” such as the number of traffic tickets you’ve gotten in the past few years, and possibly your credit report.

Because umbrella insurance works with your auto and homeowners policies, it’s a good idea to buy all three from the same company. Not only will you likely enjoy a discount, you will also eliminate the potential hassles of dealing with different insurance companies if a claim occurs.

One of the big pitfalls with umbrella policies is that even when people do buy coverage, they often don’t buy enough. An individual’s appetite for risk often determines coverage levels. For example, if you have $1 million in assets, you may be satisfied with a $1 million policy. But you should also bear in mind that if you are found liable for a greater amount than that, say $2 million, you could still lose all of your assets and end up having to use your future income to make settlement payments.

What factors determine how much coverage you need? If you drive your car rarely and don’t often have visitors to your home, you may decide that your need for the extra umbrella insurance is limited. However, if you live in a wealthy town, where people just love to sue, if you drive a lot in congested areas or if you operate a home-based business and have employees or clients coming to your home on a regular basis, your liability risks may justify a larger policy.

Umbrella policies have some limits. Most will cover you for liability arising from your service on the board of a civic, charitable or religious organization. But they won’t cover you for intentional acts that cause damage, for liability arising from a business you run or for punitive damages. In most other cases, however, it pays to have that extra layer of liability protection. 

Filed Under: Recommended Articles   •  Specialized Personal Insurance Policies   •  Umbrella Insurance

[wp_ad_camp_3]

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Read more ⤵

  • Business Insurance
  • Personal Insurance
  • Newest Personal Articles
  • All Personal Topics
  • Recommended Articles
    • Despite Its Low Cost, Most Consumers Don’t Buy Cyber Risk Insurance
    • Quick Guide to Renters Insurance
    • Not Your Granddad’s Life Insurance Policy
    • Car Insurance Policy Basics

Most Popular

  • Obesity and Life Insurance: Extra Pounds May Cost You More
  • 4 Ways To Use Life Insurance for Charitable Giving
  • Critical Illness Insurance Insures More than Just Your Health!
  • How To Protect Yourself from Dog Bite Liability Claims

Attention Insurance Agents

If you are looking for quality insurance content for your own customized newsletter, please visit Smarts Publishing:
https://smartspublishing.com

Business Insurance 411

  • Essential Property and Liability
  • Specialized Policies
  • Workers’ Compensation
  • Employee Benefits

Personal Insurance 411

  • Homeowners Insurance
  • Auto Insurance
  • Life & Health Insurance
  • Personal Insurance Basics

Read More

  • Business 411 Articles
  • Personal 411 Articles
  • Top Stories Business
  • Top Stories Personal

The Daily Blog

  • Newest Business Articles
  • Newest Personal Articles
  • Most Popular Business
  • Most Popular Personal

Copyright ©2019 TheInsurance411.com

  • Home
  • Terms of Use
  • Privacy Policy
  • About Us
  • Contact Us