It’s Worth It: Understanding the Cost of Umbrella Insurance and It’s Benefits

Umbrella insurance and the cost versus value correlation. Umbrella insurance has nothing to do with insuring umbrellas.

Insurance can be a complicated matter and it’s important to talk to your agent to make sure your assets are fully protected. There’s a good chance your agent will recommend that you purchase an umbrella policy.

Keep reading for more information about the purpose and cost of umbrella insurance to help you decide if this type of coverage is right for you.

What Is Umbrella Insurance?

Umbrella insurance is a type of excess insurance. This means it comes into play if your other insurance policies are not sufficient to cover damages after a loss. It’s also a liability policy. It will protect you and your assets from lawsuits and claims.

Most types of insurance policies focus on one type of coverage. For example, you probably have an auto insurance policy and a homeowner’s or renter’s insurance policy. An umbrella policy goes above and beyond auto and homeowner’s to give you extra insurance if coverage is otherwise exhausted. Think of how an umbrella covers you during a rainstorm, and instead of holding the umbrella over your head, hold it over your auto and homeowner’s policies.

Umbrella policies only kick in when you exceed the limits of your regular policies. It’s a lot easier than you think to have a loss in excess of your regular coverage.

Most auto policies only have a liability limit of $300,000 or $500,000, or less. A bad accident can easily cause damage in the million dollar range. If you are responsible for the accident and you don’t have an umbrella policy, if the losses exceed your standard coverage, your assets are on the line.

Umbrella policies also often offer additional coverages that other policies don’t cover. Examples of these include losses caused by you while at work or on vacation.

What Does Umbrella Insurance Cover?

Bodily Injury

Umbrella insurance covers bodily injury losses with damages amounting to more than your regular policy limits. For example, liability comes into play if you injure someone in a car accident.  Liability insurance also covers you if you are sued because someone gets injured on your property.

Even if you don’t think you could ever cause an accident, you never know what is going to happen. Even accidents with minor injuries can result in hefty medical bills and lawsuits. Your auto or homeowner’s insurance policy has a limit and if that coverage is maxed out, you need an umbrella policy to pick up the slack.

As mentioned above, umbrella policies also cover losses that your regular policies won’t, and the loss doesn’t have to occur on your own property.  For example, if you are walking your dog and it bites someone while on the walk, your homeowner’s policy might not cover this. If it doesn’t, your umbrella policy will.

Property Damage

Just like with bodily injury, property damage costs after an accident can be higher than you might expect. Umbrella insurance also covers types of losses that your homeowner’s insurance might not cover. For example, if you’re on vacation and you rent a boat and drive it into a pier causing damage,  your umbrella policy would cover this property damage but your homeowner’s insurance may not. It helps to know what your current coverage, like homeowners, will cover.

Legal Damage

Umbrella policies also offer coverage for less commonly known damages. Examples of these damages include libel and slander. Other examples are false arrest, civil charges, and violation of privacy.  Legal fees can drive a person into bankruptcy, but having this extra coverage will help in any of these situations.

Legal Fees

If you are sued, an umbrella policy will help cover your legal fees and court costs. This can be a major expense that most people can’t afford. Without this coverage, you might be forced to settle a claim simply because you can’t afford the cost of litigation on your own.

The United States is a litigious society, and an umbrella policy will help you hire a good attorney to ensure your assets are protected.

The Cost of Umbrella Insurance

Umbrella insurance policies are sold in coverage increments of $1 million dollars. If you need more coverage, higher limits are available.

The cost of umbrella insurance varies depending on which insurance company you use. You’ll want to get a quote from your agent to find out how much it will cost for you.

Generally speaking though, a $1 million dollar policy will cost you around a dollar a day, or $300 a year. The actual cost to you will depend on where you live and what sort of ‘risk’ you are.

Here are some factors that will go into determining your rate:

  • Your job
  • Your pets
  • Your hobbies
  • Your driving record
  • Your claims history
  • Any previous lawsuits

If you are considering purchasing an umbrella policy, contact your insurance agent directly. They will be able to give you a more accurate quote. Keep in mind that not everyone is eligible for an umbrella policy. With most insurance companies, you’ll need to have high enough limits on your regular policies.

Overall, the cost of an umbrella policy is pocket change compared to the benefit in the event of a loss. The cost of lawyers and the risk of losing your assets is not worth worrying about. A simple accident could cost you the assets you have worked your whole life for, and having an umbrella policy can give you peace of mind.

Contact Your Agent Today

If you are considering purchasing an umbrella insurance policy, contact your insurance agent to find out the cost of umbrella insurance for you. Don’t wait until you experience a loss to get an umbrella policy.

Contact Kicker Insures Me today for a quote.

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Are you ready to save time, aggravation, and money? The team at Kicker Insures Me is here and ready to make the process as painless as possible. We look forward to meeting you!