Car Insurance Articles
What Is An Umbrella Policy And Do I Need One?
2009-11-11
What is an Umbrella Liability Policy and do I need one?
Answer: It's extra protection for that legal rainstorm.
In legal terms, what might a rainstorm look like? A neighbor or customer falling on your property and suing you; a tree falling on your neighbor's house or car because of some natural disaster; a major accident where you are at fault, perhaps involving multiple cars, and your car insurance isn't enough; someone injured in your swimming pool or at your home-given party; a travel accident on a trip you are hosting or on a watercraft you own. These are risk factors that might put extra stress on your home or car insurance coverage. In today's sue-first society, you might have more peace of mind by adding an umbrella policy - one which sits on the top of your home and car insurance policies, ready to kick in with added coverage should you need it. An umbrella policy can add $1 million or several million dollars in extra coverage for a reasonable premium. And it's not complicated to arrange.
A typical homeowner and car insurance package sufficient to allow the addition of an umbrella policy would provide $250,000 to $300,000 in liability coverage for auto and $300,000 for home, with a $1,000 deductible for each. On top of this coverage, an umbrella policy can be added for $1 million, with a deductible of $300,000. If you were sued for $800,000, you would pay only the $1,000 deductible on the underlying coverage. The remainder of that policy, plus the umbrella, would pay the rest. According to the Insurance Information Institute (III), the cost of an umbrella policy would be $150 to $300 per year for the first million dollars, $75 for the second million, and $50 for every million after that - very reasonable considering the extent of coverage provided.
At a time when multimillion-dollar lawsuits are typical, umbrella policies are no longer luxuries. What could be at stake without one is a lifetime of savings, future income, inheritance and the financial future of children and grandchildren. Anyone in the risk groups listed above should definitely consider adding an umbrella policy. Even the occasional home entertainer or home-based businessperson should consider the possibilities of unexpected accidents and lawsuits. And, as the "III" states, coverage includes such character challenges as libel and slander. No one is immune to such threats.
Having just that little bit of extra coverage can relieve a lot of stress if the time comes when you need it - especially in today's slumping economy. Make sure to pay attention to these details when requesting car insurance quotes online. Similar to the umbrella in your closet, it's comforting to know it's there when you need it.
