What is umbrella insurance and what does it cover?
Umbrella insurance offers extra liability coverage in addition to the coverage you already have in your auto, home, or watercraft insurance policies. This means that it can provide protection in situations where the costs of medical bills or repairs exceed the limits of your existing policies. Essentially, umbrella insurance can safeguard your assets by preventing you from having to use them to settle a lawsuit.
Umbrella insurance becomes effective once your standard liability coverage has been exhausted. Here’s an illustration: Suppose you are involved in a car accident that inflicts severe injuries on several individuals. Their medical bills amount to $400,000, surpassing your liability car insurance limit of $300,000. In this scenario, your umbrella insurance can pay for the remaining $100,000.
Umbrella insurance offers additional coverage for various issues that go beyond the coverage limits of your existing policies, such as car or homeowners insurance. So, if you were responsible for a car accident that resulted in medical expenses higher than your car insurance limit, your umbrella insurance policy would cover the remaining amount. An umbrella insurance policy can provide coverage for incidents that may not be covered by your homeowners insurance, such as a lawsuit for defamation or slander. Additionally, your spouse and children who live with you are usually covered under the same umbrella policy.
Umbrella insurance typically covers:
- bodily injury to others
- property damage to others
- court defense costs related to these
- defamation, libel, slander, invasion of privacy
To sum up, umbrella insurance can offer additional financial security for your possessions if there’s an accident or lawsuit. It can bring comfort to be aware that you have an added policy beyond your home and auto insurance. Depending on your lifestyle or valuable possessions, it could be a valuable asset. Regardless of your circumstances, speak to your insurance provider to learn about umbrella coverage and determine whether it’s worth the cost.
