Throughout your life, you will have multiple types of insurance policies. For example, even in your own home, multiple policies might exist. Your auto, homeowners, renters, boat, RV or motorcycle coverage might all rest in your file cabinets. Each will likely contain liability insurance. However beneficial the coverage, the policy will contain limits. Therefore, it might not offer you enough protection for the most-severe losses. To grow your coverage out of these limits, you might benefit from the coverage offered by umbrella insurance. What is this benefit?
Umbrella insurance is a type of liability insurance. It doesn’t apply to one simple asset. Rather, you can apply the policy to multiple policies. In cases where a policy’s existing liability limits don’t cover a claim’s costs, then an umbrella insurance policy might be able to step in.
Understanding Umbrella Coverage
Any given insurance policy’s liability coverage will apply to the damage the policyholder causes others by using the insured items. For example, car insurance liability insurance will pay for the injuries or property damage you cause others if you are at-fault for wrecks. The policy might pay for the other driver’s injuries or the repairs for their vehicles.
However, you can never tell when an accident that was your fault might cause excessive losses. For example, even if you have $500,000 in liability protection, what’s to say a car accident might cause $750,000 in damage. Even if the standard liability policy will pay every penny of that $500,000, the difference might still be $250,000 ($750,000 - $500,000 = $250,000). Could you afford to repay that cost on your own?
If you have umbrella liability insurance, then you might be able to cover that excess liability cost. Umbrella coverage will pay for liability claims after your standard policy has reached its limits. So, for the example above, if your auto policy will pay the $500,000 of a claim, the umbrella insurance will pay the remaining $250,000 for a total of $750,000.
The Benefit of an Umbrella Policy
Once you buy an umbrella policy, you’ll find that it can assist you in multiple ways. Primarily, it can help you pay once you exceed the limits of your existing policy. That could therefore save you a lot of personal costs you might otherwise face.
At minimum, policies usually can provide you with at least $1 million in excess coverage. That’s a large cushion when you need it. Also, coverage can even apply to certain losses that your standard policies might not cover at all.
However, besides just the added financial benefit, one convenience of umbrella coverage is that you usually only need one. You don’t have to buy multiple umbrella policies for multiple assets. A single umbrella policy might help you cover multiple items, from your car, to your home, other vehicles and assets.
In each situation, having the benefit of umbrella coverage can assist you considerably when you need to make a claim. Consider how it might help you in certain cases.
1. Homeowners Coverage
Homeowners liability insurance will cover the harm you might cause to other people, even in accidents that occur off your property. For example, consider what might happen if a visiting neighbor sustains a serious injury that was your fault. They might even sue you for their losses. In these cases, you might need umbrella coverage to pay for the victim’s recovery costs, and even your own legal costs.
2. Renters Insurance
Most landlords require their tenants to carry renters insurance. However, excess damages might occur beyond the policy’s limits. For example, what if a fire that started in your kitchen spreads throughout the building? Multiple other tenants might sustain losses, and the damage to the building itself might be significant. In these cases, standard umbrella coverage might help you repay both the landlord and others if the fire was your fault.
3. Boat Insurance
Just like any car accident, water-related accidents could cause significant losses. If you have boating liability insurance for your vessel, then umbrella insurance might pay when that policy has been exhausted.
4. Auto, RV or Motorcycle Insurance
There is no guarantee that you’ll be able to cover all of the damage an at-fault car accident might cause you. Consider a situation where you lose control of your RV and slam into more than one vehicle, each carrying several people. The victims’ medical bills, not to mention the damage to the several vehicles, might grow excessive. As a result, your RV insurance’s liability coverage might quickly run out. Umbrella coverage, however, might help you insure all these losses.
However, all umbrella liability insurance will vary. It might not insure your against every loss. Now, will it apply to all your personal policies. Furthermore, you might have to meet certain stipulations (such as carrying the maximum liability limits offered by a standard policy) to extend umbrella insurance to your assets. Therefore, don’t hesitate to talk to one of our agents to determine your eligibility for coverage. Contact us today by email or phone!