What is “Umbrella insurance?” Perhaps you have heard the term and wondered what exactly it was. For many of you, it could be easy to assume that your agent is just trying to upsell you one more thing you don’t need. Nothing could be further from the truth and having an umbrella policy is just one more major piece of mind you can have in today’s world. It is called an umbrella policy because it sits “over” your other policies like an umbrella and protects your assets more broadly than your primary policies.
Most of us have either homeowner’s or renter’s insurance and auto insurance. These policies come with certain limits for liability that are the maximum an insurance company will pay in the event of a liability claim or judgment against you. An umbrella policy sits on top of these existing coverages AND can also provide coverage that primary policies don’t such as: false arrest, libel, slander, and invasion of privacy.
Normally, umbrella insurance is sold in increments of $1,000,000 dollars. So, let’s say you have an auto insurance liability limit of $300,000 and a homeowner’s liability limit of $500,000 and you buy a $1,000,000 umbrella policy. You would in essence then have $1,300,000 of auto liability coverage and $1,500,000 of homeowner’s liability coverage.
So, why might you need an umbrella policy in today’s world? One word, protection. The best way to protect your assets in the event of an unforeseen catastrophe such a vehicular accident in which someone you hit is severely injured or killed is to have enough liability coverage so that your personal assets are not taken. In such an event, odds are good that any judgement or claim may well exceed $300,000 or even $500,000! As you can see, an umbrella policy is just one more layer of protection and the reality is that such policies are very inexpensive when you consider the level of protection they provide.
Most umbrellas carry a self-retention (deductible in a way) but generally they are only for the losses NOT covered by your primary policies.
To learn more about umbrella policies, please contact us at 512.869.1511.