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Umbrella Insurance: What Is It And Why Is It Useful?

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Umbrella insurance exists for a few reasons. First and foremost, it is a form of liability insurance that augments or supports other forms of already existing insurance, such as auto insurance or homeowner's insurance. Umbrella insurance will basically cover you for everything for which you, personally, are responsible. This brief article will cover some of the basic facets of umbrella insurance.

What Does It Cover?

Umbrella insurance covers additional liability or an amount in excess of what you're already covered. It can also serve you in cases where you are being sued and may protect you from bodily injury claims and property damage claims that are being levied against you. Umbrella insurance covers a number of other phenomena, which include, but are not limited to false arrest, legal fees, slander and libel.

How Does Umbrella Insurance Work?                                    

Umbrella insurance can come into effect whenever you are found liable for damages owed, such as a personal injury case or whenever you are being sued in a civil case. With regard to the latter, even if you are found to not be responsible, your umbrella insurance can cover the cost of your legal fees and any related costs.

Once your basic liability limits have been exhausted, umbrella insurance will kick in to cover the remainder of the cost involved. After a claim has been levied against you by the defendant of the case, your insurance company will calculate how much you may be paid through the channels of your basic liability claim and then through the channel of umbrella insurance. In addition, costs regarding court fees or damages owed will have to be paid out of pocket.

Why Is Umbrella Insurance Important?

Your main forms of property, your house, your automobile, the land you own, and even your checking and savings accounts are considered assets. It is important to note that if you are sued for an amount that exceeds what your basic liability that your umbrella insurance can cover, then your assets will be exposed.

People tend to opt into an umbrella policy because it goes above and beyond that which can be covered by a basic form of liability insurance. In order to prevent financial ruin or having to file for bankruptcy due to being sued or having a personal injury suit levied against you, it might be worth it to opt into an umbrella insurance policy.

How Much Does Umbrella Insurance Cost? 

Although your mileage may vary regarding how much umbrella insurance costs due to your location, current financial score, credit situation, and total income, umbrella insurance generally costs $150 – $300 for a $1,000,000 form of coverage. If you decide to increase the amount of coverage, your premium will also increase.

However, it should be noted that the cost of your premium will not be proportionally affected by the total amount of your coverage. For example, if you decide that you want to raise the total amount of your coverage to $2,000,000, your premium will not raise by double that amount to either $300 - $400.

If you work a high-risk job – especially one where the safety of others is a concern – it might be worth it to opt into umbrella insurance. Likewise, those people who want the added safety of an insurance that goes beyond what a basic liability claim can cover should also opt into umbrella insurance. Contact a company like Reinard Insurance Agency Inc for more information.