Umbrella Insurance

Umbrella Insurance

Your auto insurance and homeowners’ insurance should have a provision for liability. That means you’ll have liability coverage up to a certain amount. But in some cases, your allotted liability might fall below what you need. Umbrella insurance is a type of policy you can get that provides additional liability coverage.

What is Umbrella Insurance?
Umbrella insurance is basically a safety net that catches the runover from other liability claims. It’s not a standalone insurance policy. You must already have some form of liability coverage in place. Only then can you apply for umbrella insurance. What the policy does is pick up where your existing liability coverage ends. So if your existing liability is $50,000, and you need $70,000, the umbrella insurance will provide the $20,000.

Who Needs an Umbrella Policy?
Anyone with assets can use an umbrella insurance policy. Facing a liability claim puts your assets at risk. Should your liability coverage fall short, you’ll possibly have to sell assets to pay your expenses. But an umbrella policy would make that scenario highly unlikely. Instead of needing to dig into your assets, the umbrella policy would make selling your assets unnecessary.

How Much Coverage is Necessary?
That depends on your risk level and needs. If you’re high risk for liability lawsuits, then you’ll likely need a significant amount of liability coverage. People at high risk are those with thousands of dollars worth of assets. Or people in high-risk situations, such as a person with a lot of dogs or guns in the home.

What Happens if I Still Need More Liability?
Your umbrella policy will only pay up to its limits. If that’s still not enough for your needs, then you’ll have to pay out of pocket. That’s why it’s important to carefully consider the amount of liability you think you might need. Generally, one million is the least amount of umbrella insurance you can carry.