What Does Umbrella Insurance Cover?

Increases the dollar limit of liability coverage for primary policies. Example: Assume the coverage limit on the liability portion of your auto insurance totals $300,000. If you purchase an umbrella policy of $1 million, and you cause an accident that exceeds your the $300,000 limit on your auto policy, your umbrella insurance can cover the remainder, up to $1 million dollars (a total of $1.3 million total liability coverage, in this case)

Covers claims excluded by primary policies. Example: Typical liability policies may not cover damage claims resulting from false arrest, libel, slander, or defamation of character. If you are held liable for damages caused by these types of claims, the umbrella policy can help you cover costs.

How Much Umbrella Insurance Do You Need?

The right amount of liability insurance for any individual, family or business depends upon a number of factors. These include the risks you face and the assets you want to protect. For example, if you have a passion for speed boating, you have an increased risk over someone who only takes a dinghy out on the occasional fishing excursion. And if you have a high income, you are more likely to be sued in the event that you are at fault for injury to others.

Some professionals recommend that you add up all of your assets and then double that figure to determine the amount of liability coverage needed. Others look to the costs of medical payments and legal fees, which can vary considerably by region.

To figure out the right amount of liability insurance for you, talk to a knowledgeable agent at Insuremart Inc.

Do You Need More Liability Coverage?

You may want to give special consideration to an investment in umbrella insurance in the following circumstances:

You are at greater risk for liability if you own a pool or trampoline or ride a powerful motorcycle. Statistics indicate that these activities and others are more likely to lead to expensive liability claims.

If you have assets at risk, including retirement savings, business income, college funds, and other assets with total values that exceed the liability maximum on your home or auto policy.

One of the best reasons to own an umbrella policy is the attractive price for peace of mind. The premium you pay for the maximum claim payout tends to be low. In other words, relative to the protection afforded, umbrella insurance can be a great deal.