When obtaining insurance for your home, there will be a number of different factors that you need to take into consideration. Among these factors will be determining the type of coverage that you should have in place. One option that you will have available to add to your policy is umbrella insurance. Understanding what is umbrella insurance and what it covers will help you to better determine if this add-on to your policy is worthwhile.
What is Umbrella Insurance?
Umbrella insurance is a type of insurance that is meant to add an extra layer of liability coverage to your insurance policy. Umbrella insurance can actually be used to make additions to both auto insurance as well as homeowners insurance. Sometimes also referred to as a personal umbrella policy, umbrella insurance is meant to help protect you from large liability claims or judgments that could be financially devastating. As such, an umbrella policy will kick in when your underlying liability limits have been reached.
What is Covered with an Umbrella Policy?
The specific things that are covered by your insurance policy will depend upon the agreement and final policy that you develop with your insurance agent. Some of the things that are typically covered by an umbrella insurance policy include:
- Bodily Injury
- Landlord Liability
- Personal Injury
- Property Damage
Items that are not typically covered by an umbrella policy include:
- Business Losses
- Intentional or Criminal Acts or Omissions
- Personal Belongings
- Written or Oral Contracts
Who Should Obtain Umbrella Insurance?
Umbrella insurance is not something that is always necessary, though it can certainly benefit anyone who adds it to a policy. After all, accidents that result in high-cost liability issues can happen to anyone at any time. With an umbrella insurance policy in place, you are protected against paying out of pocket to cover the cost of another person’s medical bills or legal bills if you are found to be responsible. Since an umbrella insurance policy typically extends to other members of your household, your spouse, children, and other relatives living in your home will also be protected even if they do not have policies in their own names.
How Much Coverage Does an Umbrella Policy Provide?
The idea behind an umbrella insurance policy is to help cover the extra costs for which you are found liable. So, if your regular policy covers up to $250,000 for medical expenses and you are found to be responsible for a million dollars in medical expenses, your umbrella policy may cover the rest of the cost beyond the initial $250,000. How much it covers is up to you and the policy you purchase, though personal umbrella policies are typically available in million-dollar increments ranging from $1 to $5 million. By working closely with your agent, you can better determine how much umbrella insurance you should have while also keeping the costs well within your budget. The key is to strike the right balance between having the amount of coverage you need to feel comfortable while also keeping your premium payments at an affordable level.