An Umbrella Insurance policy is a policy that gives excess liability coverage to Auto Insurance policies and Homeowner’s Insurance Policies.
So, if you were to cause a car accident and were sued for $1.2 Million dollars, most basic car insurance policies couldn’t cover the full cost. With Umbrella Insurance policies, the policy holder usually has to carry liability limits of at least $250,000/$500,000. The Umbrella policy would then give an additional amount, typically 1-2 million. So, in our case the auto insurance policy would max out at a $500,000 payout and then the Umbrella would pick up the remaining balance of $700,000.
This would work on your Homeowner’s policy as well. Let’s say you have a trampoline and your neighbors kids are over jumping and having a great time. Suddenly, one of them is bumped off and breaks their neck (these things are always worst case scenario). With hospital bills and restitution you’re on the hook for $1.5 million. Your Homeowner’s Insurance policy also has liability coverage, usually $100,000-$500,000. Umbrella policies would require you carry $500,000 to be able to purchase the $1-2 million (or more) excess liability coverage. So, the umbrella would also pick up the remaining balance in this situation also.
Moral of the story, Umbrella Policies will provide excess liability coverage. It is usually in the amount of $1-2 million, but could be more. They are typically inexpensive about $250/year, but again that depends on many factors. Do yourself a favor and make sure you are properly insured, especially if you have: teenage drivers, swimming pools, trampoline or a net worth that you’d like to protect!
Give me a call so we can assess your current needs and make appropriate recommendations! 859-916-4513