A common joke in the insurance industry, the umbrella policy does not refer to an actual umbrella. This is a very simple product, often relatively inexpensive when compared to what it offers the consumer. It is by no means a product that everybody needs.
When discussing umbrella insurance, it’s integral that you consider your previous discussions with financial advisors, accounts and CPA’s. Umbrella insurance is about one thing and one thing only: protecting your personal liability.
Here is how an umbrella policy works. First, you realize you’ve accumulated a certain amount of wealth you would like to protect. Consider the value of that wealth as this will be the guide to how much umbrella protection you need.
Second, if you own a home or several automobiles you need to know that in order to purchase an umbrella there will be minimum requirements on the coverage: 250/500/100 minimum for bodily injury and property damage on vehicles. For homeowner’s policies, 300,000 personal liability protection is required. These items in addition to any boats or recreational vehicles will need to be “scheduled” under the umbrella policy.
Third, all family members who live in your household need to be included. All rental properties need to be on the umbrella schedule as well. Once you have gathered this information, you will be ready to contact an agent and have them quote an umbrella product for you.
What does am umbrella do for you? Well, remember those limits of liability you had on your auto and your home? What if there comes a day and those limits are not enough. You could potentially be sued for more that those limits of liability protection and anything beyond that would have come straight from your pocket.
This is precisely where umbrella insurance comes in. Umbrellas come in limits in the millions, most frequently between one million and ten. But more is possible if necessary. Once the liability protection runs out on one of the items on the umbrella schedule, the umbrella limits kick in for additional coverage so you don’t have to pay out of pocket.
Umbrella insurance is a great way to protect your assets and in many cases it costs less than your auto insurance or your home insurance.