What is an umbrella insurance policy?


An umbrella insurance policy is usually viewed as an additional layer of liability insurance since it provides extra protection above and beyond the policy for your auto, home or watercraft. Umbrella insurance is designed to cover the 'cracks' of an auto, homeowners and other policies in the event of a catastrophic liability suit.

Characteristics of Umbrella Insurance

  • Umbrella insurance policies provide additional protection in the event that you are found guilty in a liability case and have to pay damages that exceed your individual liability policy limits.
  • In addition to providing extra liability protection, umbrella insurance policies are designed to cover the so-called 'gaps' of liability insurance policies, offering protection for cases typically excluded from liability policies' insuring agreements.
  • Umbrella insurance policies are very affordable, while providing an exclusively broad coverage: umbrella insurance premiums range between $100 and $200 per annum (!) for a coverage of $1 million. If you wish to buy an extra million in umbrella coverage, you will have to pay an additional $100.
  • The majority of insurance advisers share the view that umbrella insurance policies have the best value out of all insurance coverages out there, and therefore, they strongly recommend buying umbrella insurance.
  • Umbrella insurance policy comes into play in lawsuits when damages are awarded and after all liability limits have been depleted.
  • Although an umbrella policy is inexpensive, you might not be able to afford paying an extra few hundred dollars into insurance. We recommend that you review all your primary policies, such as Homeowners insurance or Auto insurance, drop the coverage you do not need or raise your deductibles to save some money on premiums.
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