Umbrella coverage is one of the best ways to layer on liability protection for you and your family. Umbrella insurance is there to protect you from the risks of an insurance claim which may be larger than limits of your homeowner’s insurance and auto insurance policies by offering additional coverage or excess liability. Well take a closer look at this extra liability coverage on how an umbrella policy works, who needs it, how much it costs and what it won’t cover.
What Is Umbrella Insurance Policy?
Umbrella policies cover a higher liability limit, usually a minimum of $1 million and are available with limits as high as $5 million to $10 million, depending on the insurer. For your home/renters or auto insurance, umbrella will cover the same sorts of liabilities at a higher coverage. For example, it will cover a third-party’s damages and injuries if you are responsible for an auto accident, or it will pay someone’s medical bills if they are injured on your property.
If you’re at fault in a car accident that results in serious injuries, you could be responsible for substantial medical costs, plus an award for pain and suffering. With the protection of a PUP policy, you’ll get coverage first from your auto insurance, and then your PUP insurance will cover the rest, after deductibles and up to your coverage limit.
How Does Umbrella policy Works?
Let’s have an example on how Umbrella policy will protect you. Let’s say you cause a car accident and the cost of the injuries you cause to others is $1,000,000. Let’s also say that the bodily injury limits on your auto insurance are $500,000. Your auto policy will cover $500,000 of the injuries. But who will cover the remaining $500,000?
Your umbrella insurance policy will gonna shoulder for it. It will cover the amount above the limit set in your auto insurance policy, up to the limit you choose for your umbrella policy, same scenario with the Home.
What does Umbrella Insurance Covers and doesn’t Cover?
Umbrella insurance usually covers
Umbrella insurance usually doesn’t cover
Others’ injury treatment and funeral costs
Your own injuries
Others’ property damage
Damage to your personal belongings
Lawsuits involving slander, libel, defamation of character and other personal attacks
Others’ injuries or property damage that your business is liable for
Your legal defense costs
Intentional or criminal acts
Injuries or property damage suffered by a tenant if you’re a landlord
Liability associated with contracts you’ve entered into
The main benefit of umbrella insurance is that it applies to a broader range of situations than a normal home or auto insurance policy. And it’s especially useful in cases where you are potentially facing a serious financial loss as a result of the claim.
According to Travelers umbrella insurance can help provide coverage for:
$1 million to $10 million of liability, which can help protect assets such as your home, car and boat.
Claims like libel, slander, defamation of character and invasion of privacy.
Legal defense costs like attorney fees and other charges associated with lawsuits.
Liabilities that happen outside the United States.
Is Personal Umbrella policy Expensive?
An umbrella policy is surprisingly affordable with $1 million in coverage costing about $200 to $400 per year (depending on a variety of factors). For less than the cost of a cup of coffee each day, Umbrella Insurance gives you good value for the cost.
An umbrella policy picks up where your auto and homeowners insurance policies leave off. It has a high deductible because the deductible is designed to be met by your other policies. Expect to pay around a few hundred dollars a year for this coverage.
Keep in mind that the cost of obtaining umbrella liability insurance can often be reduced even further: In most states, discounts are available if more than one policy is purchased from the same firm. This can make umbrella insurance less expensive if it is purchased from the same insurance company that covers your car, home, or boat.
Here are some factors that could affect the amount you pay:
Your Driving Record
What are the Benefits of having Umbrella policy in General?
According to Nest website, there are 4 factor Umbrella policy is beneficial to us:
It will Add on the policy.
A major reason to get an umbrella insurance is to protect your assets.
3. Low Cost
4.Peace Of Mind
Is Property Damage included or covers to Umbrella policy?
Umbrella insurance generally covers you if you’re responsible for damaging other people’s property, but it won’t pay out for damage to your own belongings. Say you get into an accident and cause more damage to other vehicles than your auto liability coverage will pay. Your umbrella policy would make up that difference — but it wouldn’t pay for repairs to your own car.
Looking to speak to an insurance professional? We can help you to find the right blend of price, coverage, and providing you the best coverage to fit your risk management needs. Call us at (914) 269-2334.