YOU ASK:

What do I need to consider when buying a personal umbrella policy?

WE ANSWER:

Having an umbrella policy is one of the best ways to protect your financial assets in the event that you are sued for injuring or causing property damage to a third-party. Not only do you get a considerable extra liability coverage for a low price (roughly about $100-$200 for $1 million) but you also receive protection for risks not included in your major policies.

Tips for Buying an Umbrella Policy

An umbrella policy is regarded as one of the best insurance investments, because of the substantial coverage it provides and its affordability. However, many people take the advantages of umbrella insurance for granted, leaving gaps between their primary and umbrella policies they are sometimes not even aware of.

To avoid similar mistakes, there are a few things you should consider before buying an umbrella policy:

  • It is of primary importance to coordinate your umbrella with your primary policies, making sure it covers all the risks you are exposed to that are excluded from your primary insurance.
  • Insurance counselors usually recommend that you select the primary insurance policy provider based on the umbrella policy options that it offers. This will help you narrow down the list of insurers and select a primary auto and homeowners policy with less gaps.
  • Don't let price be the guiding consideration when selecting an umbrella policy. Umbrellas are usually very inexpensive and there isn't a great variation in price. What should be the guiding principle instead, is how well the umbrella covers the gaps in your primary policies.
  • Make sure the insurer you choose is financially strong and reliable. You can do this by checking each insurance provider's rating online. Weiss rating and Best are two of the rating organizations whose rankings you can trust. A good insurer will have a rating of A, A+ or A-. Don't go with an insurer rated B or lower!
  • You should buy your umbrella from the same insurance provider as the one who you have bought your primary policy from.
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