Umbrella Policies

What is an Unbrella Insurance Policy?

Umbrella insurance is that extra coverage or and “umbrella” over all the other liability insurance you may already be carrying on your home, auto or boat (watercraft). It is an extra layer of liability insurance that goes beyond the limits of what your current coverage security to protect against the possibility of an accident where someone is seriously injured. This type of insurance also protects against libel, vandalism, slander and invasion of privacy. This policy is very important when the insurance is being sued and has exhausted the dollar limited of his original policy. This type of policy is recommended to individuals with lots of assets or very expensive assets that may be at significant risk for being sured.

How does this type of policy work?

An umbrella policy only pays once your basic liability limits have been exhausted or the claim is excluded from the basic liability coverage. The claim will be made against you, the policyholder, on behalf of the wronged party. Then your insurance company may pay the settlement amount up to the limits of your coverage. If the settlement amount exceeds your coverage limits, you are responsible for paying the remaining amount out of pocket.

Is this type of Insurance important?

Do you have assets? Your car, house, investments and retirement accounts, as well as your normal checking and savings accounts and even future income, are all considered assets. If you are sued and you haven't enough liability insurance to cover the costs your assets could be claimed to pay for the costs. Umbrella insurance can provide the protection to prevent such an outcome.

When considering Umbrella Insurance you need to take into consideration:

1. The risks you may face. Consider risks as a homeowner or renter, the risk of causing an accident during your work commute, and any potentially dangerous activities you participate in that could put those around you at risk.
2. The value of your assets. These include properties, possessions, stocks, bonds, savings and retirement funds. The more assets you have to protect, the higher the umbrella policy limit you should consider.
3. Your future income may be at risk, too. Because liability lawsuits can result in loss of both current assets and future income, even those with few assets to protect may want to consider the long-term ramifications of a serious claim.

You may have lots of questions about this type of insurance, so please give us a call. At Preferred Insurance Solutions we are happy to help guide you through the process. Call us today.