Umbrella insurance is additional liability coverage. It is in excess of liability coverage on homeowners insurance or auto insurance. It guards against claims that might exceed policy limits. It becomes active after your policy limits are exhausted. Umbrella coverage has its own policy limits, which is usually a minimum of $1 million.
A policyholder can choose to use umbrella insurance as primary insurance for risks not covered by standard liability. This would include things such as libel or slander. This coverage benefits people with several assets who are at a high risk of being sued.
If you’re facing a huge lawsuit, then your car, home, bank accounts, investments and future income can be seized in the judgment. The cost of umbrella coverage is significantly less, when compared to traditional insurance. You can even get a lower premium based on factors such as your age, driving record, credit score and claims history.
Umbrella coverage is available when you buy the maximum auto or homeowners insurance. The limits vary, but you will probably find that $300,000 is the per person limit with $500,000 being the limit per occurrence. If you cause an accident, and the damages exceed your $300,000/$500,000 policy limits, then umbrella coverage will help.
As stated earlier, umbrella insurance is mostly for people with something to lose. If you’re at risk for lawsuits, and could lose everything in the process, then you should consider umbrella insurance.