Umbrella insurance functions as an extra added layer of liability coverage over and above one’s already existing liability coverage. Should there be a major legal claim or actual lawsuit, this protection can be activated. If your regular policy were to exhaust its limits on your automobile, home or boat insurance coverage, your umbrella coverage kicks in and takes over from where your primary coverage ran out.
Good umbrella insurance is supplemental coverage for injuries or damage for which you are at fault or for those who re also insured by your policy. It can even protect the policyholder from such things as libel or slander.
Generally, good umbrella insurance starts at least at $1 million but. Policy limits can be increased too and can also help with the extra costs of defending yourself in a lawsuit.
For example sake, let’s say you're involved in a severe car collision and you the one at fault. Should the other driver spend months laid up in the hospital and then require a long period of rehabilitation, your auto liability policy, which often would be limited to $300,000, could easily run out. Your auto policy would, in this case, likely pay out the first $300,000 in costs but whatever is over and above that amount, without umbrella coverage, would be your responsibility to pay out-of-pocket. This could easily be financially disastrous for most if it weren’t the $1 million umbrella coverage that kicked in to save the day.
In short, basically anyone can benefit from good umbrella coverage should another person be hurt through the policyholder’s negligence. One’s home, investments and savings and other important assets would all be in jeopardy if a large legal judgment against the policyholder were to prevail. Keep your hard-earned assets and savings safe with appropriate umbrella coverage; it could mean the difference between a life of financial well-being or one afflicted by money problems and high stress.
The good news is that umbrella coverage is relatively affordable with an average of around $200 per year for a $1 million of coverage. Enjoy the peace of mind of being fully protected by obtaining an umbrella policy over and above your liability coverage.