What Is An Umbrella Policy? Is It Worth Getting?

An umbrella policy will protect you against excess damages for both your homeowners and auto insurance policies. In essence, it kicks into effect when you have exhausted the coverage of that particular policy. But before you decide that you have absolutely got to have yourself one of those, take a few minutes to read this article, and decide whether it would really be of any use. An umbrella policy is usually very inexpensive, costing only a few hundred per year, but many companies will not provide you with umbrella coverage unless your car and home are insured with them through policies with maximum deductibles.

What Is An Umbrella Policy?
As an example, say that you are involved in an auto accident, and are found to be at fault. You find that your insurance policy covers $250,000 in damages, but the total claims filed against you by all injured parties are $1,000,000. Without an umbrella policy, you would be liable for the excess amount of $750,000. But if you had an umbrella policy, it would kick in after the $250,000 was used up, and pay the remaining balance.

What Does an Umbrella Policy Cover?
An umbrella policy will cover both personal and property damage, but it also goes a step further, and covers you for personal damage, which could be lawsuits or even libel or slander against you resulting from the incident. As mentioned, you can expect to be required to max out your other deductibles, and it is not uncommon to require the policies be combined through a single insurance provider.

Do I Need An Umbrella Policy?
If you are subject to large amounts of liability, including having a pool or trampoline, or frequently entertaining guests and visitors, an umbrella policy is probably not a bad idea. Keep in mind another scenario, also. If you have a lot of personal assets, or may be considered to be wealthy, antagonistic insurance companies as well as seemingly impartial jury will be more inclined to settle for higher claims.

Before you decide that an umbrella policy is your solution, take a look at the coverage of your homeowners and auto policies when they have been maximised. You may find out that additional coverage is no longer required. And since you will be likely to have to do this before getting the umbrella policy, having large deductibles should be your first line of protection. For many, an umbrella policy is the perfect way to provide an extra level of protection, but for a majority, it is rarely required.