When considering auto and home insurance, it is often recommended that you consider purchasing umbrella insurance. If you are likely to exceed the coverage limits of these policies. But what exactly is umbrella insurance? Why is it necessary?
What is umbrella insurance?
Umbrella insurance is, to explain it simply, additional liability insurance. If an accident happens to your home or car and causes damage that exceeds the amount of your insurance, you will have to pay out of pocket. If you exceed the coverage limits of your standard policy, the umbrella insurance is activated and the additional costs are paid by that policy.
In the event of a legal claim, such as if you are sued, the costs can quickly skyrocket if you do not have additional liability insurance. If you are convicted and cannot pay immediately out of pocket, the court may withhold your wages to satisfy the judgment, and even your ability to earn money in the future may be compromised.
Umbrella coverage not only provides liability protection above and beyond the insured amounts, but can also cover defamation and attorney’s fees that are not covered by normal auto or homeowners insurance.
Do I need umbrella insurance if I have home insurance?
The quickest way to answer this question is to say that anyone at increased risk of being sued should consider umbrella insurance. Factors that may contribute to this include.
- High profile – the more well-known you are to the public, the higher the risk of being sued. The same is true if your family members are on the board of directors of a non-profit or charitable organization, and liability insurance may not apply to those who serve on the board in that capacity.
- Pools, Trampolines – An injury on a trampoline or drowning in a pool increases your risk.
- Sports cars/RVs – Powerful sports cars, snowmobiles, boats and motorcycles may be fun, but the risk of injury is higher.
- Home-based customers – if you have a home office or store and customers come to your home. The risk of an accident is higher and can lead to you being sued.
- Wealthy people – if you have an accident and you are at fault. Your risk of being sued is higher if you have a high income or are wealthy.
- Land or property – if you own land that other people have access to and people are injured on that land. You can be sued – even if the people do not have permission to enter the land.
Talk to an insurance broker – this is the best way to determine if additional insurance is worthwhile for you. Most importantly, what you want to insure and protect is your overall long-term safety.
How do you find cheap umbrella covers?
An umbrella cover is usually pretty cheap, unless your situation presents an unusual risk. As with other insurance, you can potentially get cheaper premiums if you increase your deductible. Purchase more than one class of insurance from the same insurer (discounts due to multiple coverages). If you have not had a claim in the past.
About Author
Lily Poole is a Property and Home Insurance officer by profession. She is pretty well experienced in the landlord insurance NYC and accounting field. Further, she has an impressive profile in the training and development industry.
