Umbrella Insurance Explained
Umbrella coverage is extra liability insurance that goes beyond the policy limits of your auto or homeowners insurance protection. If your existing liability coverage isn’t enough to fully compensate someone’s damages for which you were at fault, whether it is from a motor vehicle crash or accident in your home, this is where umbrella coverage steps in to avert potential disaster.
Despite the conventional wisdom, one does not have to be hugely affluent to enjoy the benefits of good umbrella insurance coverage. Just simply owning your own home and being the head of a household is enough to justify having this wonderful added protection. Whether you fall asleep at the wheel and cause a crash with a car that is driven by a noted attorney at law or if your clumsy Uncle Jim falls off the deck step and breaks a hip, without enough coverage, everything you have worked so hard for could be in jeopardy. Often, the typical auto or homeowners insurance will cover the initial $300,000. The problem is that you are personally liable for any amounts that exceed that or any other policy limit.
What it does
In addition to the above outline, good umbrella insurance will even cover certain perils not covered by one’s existing homeowners’ or auto insurance policies. Examples include:
• Defamation or Slander
• Malicious prosecution
• False arrest or imprisonment
• Infliction of mental anguish
If you are the object of a lawsuit, you will no doubt incur huge legal expenses. This is true even if you prevail in the lawsuit. Expensive and lawyers go together, like peanut butter and jelly. However, with a typical umbrella policy, the insurance provider will appoint a legal team on your behalf to fight for you, and the insurer will pay for such things as court costs and for the lawyers too. If you’re found to be guilty with a judgment against you for a substantial sum, your umbrella coverage stands ready to protect you with a payment for any level of judgment that exceeds your underlying coverage. (This, of course, is limited to the maximum amount of your umbrella coverage.)
How it functions
Umbrella coverage comes in $1 million increments. Depending on your past history, the first million dollars of umbrella coverage will normally cost around just $300 per annum. Each additional $1 million of coverage will likely set you back another $100 or so.
Remember, it only takes a moment in which your eyes are off the road or in which someone slips and falls on your property to know how vital good umbrella coverage can be. Speak with an insurance pro today for more information.