What is Umbrella insurance?
Umbrella insurance is extra insurance that protects existing limits and coverages of other policies. Umbrella insurance can cover certain lawsuits, property damage, injuries, and personal liability situations.
What does umbrella insurance cover?
Umbrella insurance covers you over the limits of other insurance policies and for damages that might not be covered under the liability policy. The umbrella insurance typically provides insurance coverage for liability claims:
- Personal liability situations
- Damage to property
- Certain lawsuits
What is not covered by an umbrella policy?
An umbrella Insurance policy generally doesn’t provide coverage for:
- Your injuries or damage to your personal property
- The liability you assume under a contract
- A criminal or intentional action is causing harm to someone else.
How does an umbrella insurance policy work?
An umbrella insurance policy will help to protect your assets as well as your future in two ways:
- Umbrella insurance may provide coverage when your auto, homeowners, and boat insurance policies limits are finished.
- Umbrella insurance provides coverage for claims that may be banned by other liability policies, including claims like slander, false arrest, libel, and liability coverage on rental units you own.
How can umbrella insurance help protect you?
Let’s examine an example that can help you understand how an umbrella policy can be able to safeguard you.
Let’s suppose you caused a car accident and the amount of injury you cause to other people is $500,000.
Let’s further assume that you have bodily damage limits for your auto insurance are $300,000. The auto policy covers $300,000 of the damages. Who will be responsible for the rest of the $200,000?
Your umbrella insurance policy will. It will be able to cover any amount that is greater than the limit specified in your automobile insurance policy but only up to the amount you select as the umbrella insurance policy.
Here’s a breakdown of the total cost, including the areas where your insurance limits for autos could be exceeded, and the ways umbrella insurance may help safeguard you:
|Total Cost of Car Accident||$500,000|
|Auto Insurance: Bodily Injury Limit||$300,000|
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