Let’s talk about Umbrella Insurance Policy. There are very slim chances that you will lose a lawsuit for an amount that is greater than your existing insurance pay. But if you get to be in that situation, it’s scaring that you might lose all your savings.
Insurance Umbrella Policy is designed to keep you out of that nightmare. We get to know more about the Umbrella policy below, how it works, how much it costs, who needs it, and so on.
What is Umbrella Insurance?
This is a type of personal liability insurance that can not be ignored when you are making a larger claim than your normal homeowners or auto insurance policies will cover. For instance, if you own a boat, with the umbrella insurance you can decide where your liability insurance can omit.
Umbrella insurance can cover more liability claims than some other insurance policy may not, like, slander, false imprisonment, and even libel. If you also own a rental property, with umbrella insurance you can get more than what your renter’s policy will offer.
How Does Umbrella Policy Works
To know how Umbrella Policy works we will lay some examples of incidents an umbrella policy can cover if your homeowners or auto insurance cannot cover it.
Your dog got loosed and attacks a neighbor or passerby. You can get sued to cover the medical bills, pain, and suffering, and even lost wages.
You gave your son sandwiches for their school field trip, and other students develop food poisoning eating from it, and you get sued by their parents.
Your son gets into a fight with a student in school, and he punches and broke his nose, you can be sued by the parent.
From the examples you have seen above, umbrella insurance does a lot. It does not just cover the policyholder, but it also covers the family, members, and household of the policyholder.
If you have a son who drives badly, you have rest knowing well that the umbrella insurance covers his damages. But with that, you need to understand how full your umbrella insurance policy defines your household member so that you can get the coverage you need.
However, you will also observe that, though the umbrella insurance covers many not just you but your household and family.
You will also notice that the incident doesn’t need to happen within your property or your vehicle to get your umbrella insurance to cover it. It also covers you worldwide, but expect the homes and cars you have in other countries’ laws.
Do You Need Umbrella Insurance
Sometimes you will feel nervous or scared making the decision of buying an Umbrella Insurance. You will be advised by many insurance companies due to the lawsuit-happy world you will live in.
There are horror stories in some personal liability in the news. Where a jury will award a multimillion-dollar judgment for the individual to pay. But how would you know you need umbrella insurance?
The normal and general rule you have to consider is if you want to purchase umbrella insurance and the total value of your assets which includes retirement and college savings account, checking and savings accounts, investment accounts, and home equity is more than the limits of your homeowner’s or auto insurance
The idea behind this is to make sure you won’t lose your assets in a lawsuit, and you have enough liability insurance to cover your assets.
However, some people need the umbrella policy more than others. If you are into things that will put you at a greater risk of getting excess liability. Then it’s best you purchase an umbrella policy.
The risk factors in personal liability include, employing household staff, having a trampoline, being a well-known public figure, owning property, renting it out, etc.
How Much is Umbrella Insurance
The cost of umbrella insurance varies by state and it also depends on. How much coverage you purchase, the state you are. And also the risk you are insuring to the insurance company.
The more properties you own, and household members and family the policy will cover the costlier the policy.
However, compared to other insurance policies, umbrella insurance is quite cheap. The information gotten from the Insurance Information Institute says when you purchase $1 million policies it cost about $150 – $300 per year.
While for $2 million you are expected to pay $75 more per year. And when it’s above that you pay an extra $50 for every $ 1 million.
What Umbrella Insurance Doesn’t Cover?
The good thing about umbrella insurance policies is that he covers a lot of things. They even cover other incidents that are not included specifically in the policy. Unlike some policies that cover only the listed incidents.
But should note that no insurance policy covers everything. There are some incidents umbrella insurance doesn’t cover such as
- Damage to your property You should have in mind that its a liability insurance policy. It only protects you when you are responsible for damaging others’ property. Always have enough homeowners insurance policy to cover your personal possessions.
- Damage caused by you or by your family or household intentionally. If you intentionally cause havoc to your neighbor. The umbrella insurance policy will not be covering the costs of the lawsuit or judgment given
- Incident incurred during business or professional activities. Any incident during business meetings or activities relating to the business will need business liability insurance to cover that.
- Incident you accepted to assume when making or signing a contract.
- An incident that is relating to armed conflicts or war.