In what cases would I need Umbrella Insurance?
If there is an accident that incurs claims that cannot be covered by your home or auto insurance because you already reached your limits, this is where your Umbrella policy would kick in.
Umbrella Insurance is that extra layer of financial protection that comes to your financial rescue, especially in court battles where you are sued and found liable. But most importantly, imagine if you were the victim, you would also hope that the party-at-fault had the proper insurance to cover your damages.
Picture this scenario, it can happen to anyone
You’re out driving with three of your friends and you accidentally run a red light and run into crossing traffic. While everyone is alive and will eventually be okay, you suffer chronic nerve damage in your neck, your friends and other driver suffer from broken bones, the other car is damaged, and your car is totaled. You are sued for lost wages and ongoing medical bills.
How does an umbrella policy work and what does it cover?
First, your auto insurance will kick in to cover the damages. However, after all the damages are totaled, the accident will cost you $400,000. Your auto insurance only covers up to $300,000 in claims. With an umbrella policy, you can cover the remaining $100,000 in damages. Umbrella policies can help provide added coverage for anything that is covered in your auto or home insurance.
Whether or not you need an umbrella policy depends on a few different factors, including:
- Do you have significantly valuable assets?
- Do you have any risks as a homeowner or a renter?
- Do you have a long commute to work?
- Do you participate in any potentially dangerous activities or hobbies?
Umbrella policies can offer coverage from 1-5 million dollars. So, similar to the example above, if you have an umbrella policy for 1 million dollars in coverage, your auto insurance will cover the limit of $300,000 and the umbrella policy will cover the remaining bill of $100,000.
However, it is important to note that In order to purchase an umbrella policy, you need to be carrying the highest limit for both your home and auto insurance.
Protecting your important assets
An umbrella policy protects you and your assets when your home or auto insurance policies have met their limits. If you are found liable for damages in a court case, the judge can garnish your wages, in the case that you have insignificant assets.
Talk to your insurance agent to find the right umbrella policy for your budget and lifestyle.