How an Umbrella Insurance Works

Umbrella insurance refers to extra insurance whose aim is to provide protection that exceeds the limits and coverage of other policies. This policy can cover property damage, injuries, and even certain lawsuits. For instance, the umbrella policy will cover what you owe if you are sued for damage above your liability insurance limit. Umbrella insurance policies help you avoid financial stress if you accidentally cause significant injuries or damage to others. You may ask yourself “how much umbrella insurance do i need” To get a better understanding of how umbrella insurance can be of great help, check on this possible life scenario:

You are driving your car and accidentally hit the one in front of you. The car you hit gets significant damage and needs $24,000 for mechanical work. Those on inboard get injuries that total $280,000. Unfortunately, the driver is a dental surgeon, and he will not be able to attend to his duties for a couple of months due to a broken leg. The driver sues you for $195,000 to cater for his lost earnings. From simple arithmetic, you are supposed to part with $500,000 approximately. Your car liability insurance can only cover up to $300,000. Where do you get the remaining $200,000? This is why you need to get yourself umbrella insurance coverage. It will cover the balance and the legal costs of the lawsuit. Without umbrella insurance, once your car insurance liability limits are exhausted, your assets are subject to the risk of being auctioned to cover the excess remainder penalties.

Who needs an umbrella insurance policy?

You, therefore, realize that umbrella insurance provides extra coverage that protects your assets. It gives you enough liability insurance to fully cover your assets so that you do not lose them in court cases. It is a good option for those people with high-risk factors such as keeping a dog, owning property, renting out a property, and having a swimming pool in their compound. Other people that need this insurance are:

1. Having significant savings that are at risk of being lost when sued.
2. Regularly posts reviews of products and businesses
3. Take part in sports where you may easily injure others, for instance, hunting.
4. You are a public figure
5. Often host parties in your home
6. You coach kid’s sports
7. Are a landlord

Coverage beyond the base insurance policy

There is another advantage of having umbrella insurance. That is, you get coverage that is not found in a base house owner or auto policy at all. This includes malicious prosecution, false arrest, false imprisonment, wrongful detention, and invasion of privacy.

How much umbrella insurance do I need?

Even though umbrella insurance caters to extra coverage beyond ordinary liability policy, it does not cover injuries or damage to your property. The following are also not covered by this insurance policy:

Written contracts
Oral contracts
Personal business losses
Intentional injury by yourself
Damage caused by war or terrorism
Losses incurred from personal and professional activities

How much does umbrella insurance cost, and how to buy it

The cost of umbrella insurance depends on the amount of coverage you choose to buy. Other factors affect the cost. These are your location, the number of vehicles you own, and the number of houses you have rented out. These factors may affect the umbrella policy premiums.

To purchase umbrella insurance, visit the companies that hold your liability insurance. You will be guided to get an umbrella policy that fits your needs.