YOU ASK:

What are the advantages of an umbrella policy?

WE ANSWER:

An umbrella insurance policy is designed to provide additional protection in the event that the insured is sued for liability. It is considered the coverage with some of the best insurance values since it allows you to get considerable extra protection for up to $100 a year.

Personal Umbrella Policy Advantages

  • Higher liability limits.

    Umbrella insurance provides a second layer of protection of considerable amount above the liability limits determined in the insuring agreements of your homeowners, auto, etc. policy. This means that whenever your primary policy liability limits are exhausted, your umbrella insurance policy will kick in to cover the remaining liability damages.

    Umbrella policies are a much-needed protection, especially for those who are considerably exposed to liability risks. Not having umbrella insurance can result in you losing all your assets in the unlucky event of being the defendant in a serious liability lawsuit.

  • Affordability.

    A very significant advantage of umbrella policies is their favorable correlation between price and coverage. Umbrella insurance is very inexpensive: if you purchase $1 million of coverage (which, incidentally, is the lowest umbrella coverage you can get), you will be charged between 100 and 200 per year (!). An additional million will cost you between $60 and $100.

  • Higher defense costs.

    Your primary insurance provider will typically agree to defend you until your policy liability limits are reached. Any defense costs above your primary policy liability limits are your own responsibility. Along with the damages you might have to pay, defense costs can also have devastating financial consequences for you, since they are usually very high.

    Having an umbrella policy will cover any extra defense expenses that you might have incurred in a liability lawsuit.

  • Gap coverage.

    Your primary auto or home insurance policy protects you against liability arising out of certain circumstances. However, these policies typically contain a long list of exclusions.

    What an umbrella policy does is cover some of the so-called 'cracks'. These are usually very specific situations in which liability may arise. You are strongly advised to consider your personal liability risk before starting shopping around for an umbrella policy. Make sure the coverage you buy covers all the gaps, and especially your specific and unique gap, if you have one.

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