What is an umbrella policy and how does it work?
What Is Umbrella Insurance?
Umbrella insurance is a type of personal liability insurance that can be essential when you find yourself liable for a claim larger than your homeowner's insurance or auto insurance will cover. If you own a boat, RV, Motorcycle or ATV, an umbrella insurance will also pick up where your primary insurance leaves off.
An umbrella policy even covers certain liability claims those policies may not, such as libel, slander, and false imprisonment. And if you own rental property, umbrella insurance provides liability coverage beyond what your landlord policy covers.
How Does an Umbrella Policy Work?
Here are some examples of incidents an umbrella policy could cover if your homeowner's insurance or auto insurance wasn’t enough:
- Your dog runs out of the house and bites a neighbor who was walking by. Your neighbor sues you to cover his or her medical bills, lost wages, and pain and suffering.
- Your son gets into a fight at school and punches another boy, breaking his nose. The boy's parents sue you.
- You cause a multi-car accident and your auto insurance property damage coverage isn’t high enough to replace all 10 accident victims' vehicles. Nor is your personal liability coverage high enough to pay for their medical bills.
- You send sandwiches to your daughter's school for a field trip lunch. Several students develop food poisoning and their parents sue you.
- Your teenager throws a party at your house while you’re out of town. Someone brings alcohol to the party, and one of the guests is arrested for driving under the influence on the way home. You are sued.
You may have also noticed that, even though an umbrella policy acts as coverage above and beyond your homeowners and auto insurance, the incident doesn’t have to involve your property or your vehicle for your umbrella insurance to cover it. You’re also covered worldwide, with the exception of homes and cars you own under other countries’ laws.
Do you know how to select the proper liability limits to protect your assets? Most likely, the answer is "No" but we here at Budget Insurance & Tucson Insurance Solutions make it simple and easy to calculate the level of protection that's right for you.
All too many times we as consumers get caught up in the game of saving a few dollars on our insurance. Yes, we agree that paying too much is never a good thing but let's stop for a moment and think about the REAL SAVINGS insurance has to offer.
Your auto, home and other insurance policies include liability coverage. This coverage is in place to protect your assets but not having the proper coverage can be costly.
The liability limits you select protects your assets but it doesn't mean you're off the hook. If a claim or lawsuit exceeds the coverage amount you carry, YOU are responsible for anything above that amount. This means that your assets become the next "coverage" you have in place. Not only the equity in your home, savings and investments are at risk but so are your future wages. Did you know that the national average wage garnishment is 33%? Yes, that means that a judgement against you can not only dip into your current assets but also your future earnings through wage garnishment.
We realize the idea of this all is a little frightening but set your worry aside. We can help you select the right coverage to give you the protection and peace of mind you need.
Figuring out the level of coverage you need is easy. Let's get started: