The Benefits of Umbrella Coverage

Buying an auto insurance policy provides protection if you are involved in a car accident. You most likely know, however, that your insurance policy has limits, and after those limits are exceeded, any excess costs will be your own responsibility. Often people who believe they are adequately protected by their car insurance find their personal possessions, such as their house or personal finances, repossessed to compensate the extra expenses. This is where umbrella policies can help protect you. Umbrella policies are designed to extend your personal liability insurance. In the event of a serious accident, especially one that may involve personal injury, an umbrella policy can protect your assets and save you from financial straits.

Your umbrella policy will not cover any expenses until your other coverage policies reach their limits. Your umbrella policy kicks in to protect you when costs exceed the maximum coverage on your homeowners or auto insurance plans. Because they do not start until your other protection stops, umbrella policies are generally less expensive than your other insurance policies. Umbrella policies not only extend your liability protection, but provide coverage in the event that you are sued, or if you are responsible for bodily injury. Usually this type of protection is not offered by your standard homeowners or car insurance policies. The deductibles for umbrella policies are usually under a thousand dollars, which can be quite low considering lawsuits can ask for millions of dollars. Furthermore, even if the litigation brought against you is invalid or frivolous, your umbrella policy will still cover the costs you will incur just executing the minimum necessary legal defense.

An umbrella policy is extra security. It is designed to protect you in serious situations, especially those where you might face legal action from another party. Usually an insurance company will only sell you an umbrella policy if they are also your provider for your homeowners or auto insurance. It is important when purchasing umbrella insurance, like any insurance, to analyze the necessity and value of your policy. Consider your risk, as well as the value of your assets and your net worth. While you want to make sure that you have adequate coverage for your needs, you obviously do not want to purchase excessive coverage. While evaluating your risk, be thorough. Evaluate the likelihood of you injuring someone, or of someone being injured on your property. You may be better served to simply raise the level of your liability coverage, without having to purchase an umbrella policy. You can determine which option is better by comparing the price of your premium if you increase your existing coverage, compared to the base premium of an umbrella policy. It is possible that by raising your existing liability deductible, your premium rates will not skyrocket when increasing your liability coverage.

Each year there are more and more lawsuits brought against people for personal and property damage. If you feel that you are at risk, buying an umbrella policy to expand your liability coverage may save you thousands of dollars, if not protecting your net worth and assets in general. Talk to your current homeowners or auto insurance provider for more information and guidance.

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