Umbrella insurance provides extra liability coverage if you're sued beyond the policy limits of your auto or homeowners insurance coverage. It provides an extra plateau of insurance coverage after the limits of your underlying policy have been exhausted.
Who is umbrella coverage for?
If you own at least one motor vehicle and a home, you'll probably want umbrella coverage. It's incredibly inexpensive, and you never know who might get injured on or off of your property.
How umbrella coverage works
If you have umbrella insurance, your coverage is triggered when your basic homeowners or auto liability policy limits have been exhausted. The usual and customary umbrella policy is for $1 million, but additional coverage can be purchased beyond that amount. Before purchasing umbrella coverage, you'll be required to have maximum liability insurance on your homeowners and auto policies. Those are usually $250,000 on homeowners and $300,000 on auto.
Types of umbrella coverage
In some respects, umbrella coverage is broader than your liability coverage. Most umbrella policies cover lawsuits that might include allegations of false arrest, libel, slander and other causes of action. It's likely to cover attorney fees in your defense that go beyond specified limits.
Major benefits of an umbrella policy
The more assets that you have, the more you'll want to protect them. If you caused a major motor vehicle accident, and a verdict came in against you at $500,00 with only $300,000 of coverage, you're personally on the hook for that extra $200,000. Your personal assets could get hit hard. A $1 million umbrella policy probably won't cost you more than $200 per year. It's also going to bring you some comfort too. The more extra protection you buy, the less expensive it becomes.
We all work hard, and we want to protect what we've worked for. With the affordability of an umbrella policy, you won't even dent your assets.