A little known, cost effective way of protecting your family and your assets is an umbrella insurance policy. It works to add an extra layer of coverage should you cause a serious injury to someone who later brings a claim against you. Some policies may also provide an extra layer of underinsured motorist coverage which protects you and your family members in the event one of you suffers a serious injury in a motor vehicle collision.
An umbrella insurance policy is a second insurance policy that you can purchase in addition to your automobile and homeowners policies. For example, let’s assume that you have an automobile policy which provides for $100,000 of coverage for liability claims. This amount of coverage may be adequate in the event you cause an accident and someone brings a claim against you. However, with rising medical costs, you could cause an accident where the injured person has a claim well in excess of $100,000. If you have an umbrella policy, the umbrella policy will pick up any amount of the claim which exceeds your $100,000 automobile liability limit.
Umbrella policies are usually relatively inexpensive. You can add an additional $500,000 or even $1,000,000 of coverage on top of your automobile policy. It is much cheaper than your automobile policy, because the risk of the umbrella insurer having to pay for a claim exceeding limits is relatively low.
By having an umbrella policy, your assets, including your home, savings, and even future earnings are protected in the event someone has a large claim against you for a serious injury.
Most umbrella policies also provide coverage over and above the liability limits on your homeowners policy. The insurance policy you take out on your home is primarily to cover damage to your home caused by a fire or other calamity. However, nearly all homeowners policies also provide liability coverage. So, if someone is injured in your home as a result of your negligence, your homeowners liability policy will cover any claim against you. An umbrella policy provides an additional layer of coverage not only on your automobile liability policy, but also on your homeowners liability policy. As the name implies, it provides an umbrella of coverage over and above all of your other liability policies.
A word of caution, however: while uninsured motorist coverage protects you and your family as well as guests in your vehicle against injuries caused by an uninsured or underinsured driver of another vehicle, umbrella policies typically do not provide an additional layer of uninsured motorist coverage. However, many companies are now offering an umbrella uninsured motorist policy along with an umbrella liability policy. Usually, there is an additional small premium for the umbrella uninsured motorist policy. This is a very cost effective way of providing additional coverage for you and your family in the event one of you is seriously injured in a motor vehicle collision.
Most insurance brokers are very familiar with umbrella policies and can discuss this topic with you and offer a quote. Most umbrella policies do require, however, that you have a minimum amount of automobile coverage in effect – typically $100,000 of liability coverage. An umbrella policy is no substitute for good basic automobile and homeowners policies. An umbrella policy can, however, supplement these policies in a cost- effective way. Please contact Abeyta Nelson Injury Law to discuss how an umbrella policy may provide peace of mind for you and your family.