Do You Require An Umbrella Insurance Policy?

Kimberly Bean
Published on October 16, 2015

Do You Require An Umbrella Insurance Policy?

Nearly everyone in today’s modern world needs homeowners insurance and car insurance. These policies will cover certain items and circumstances, but it comes down to you and your assets when you’re deciding whether you want to purchase an umbrella policy.

An umbrella policy is designed to provide you with extra liability coverage that goes beyond coverage limits set on your existing auto, renters, or homeowners policies. An umbrella policy is put in place to protect your assets from any major claims or lawsuits resulting from an incident on your property or an accident you cause in which someone is injured. The assets protected by an umbrella policy include any investments, your retirement fund, future earnings, your savings, and your home. An umbrella insurance policy also protects you in slander or libel lawsuits.

How does an umbrella insurance policy actually work?

After the liability if your existing insurance policy has been exhausted, the umbrella policy will be triggered. For example, someone is injured on your property, and the medical care they need exceeds the maximum limit set by your homeowners insurance policy. The umbrella policy kicks in to take care of the rest. Because umbrella policies are exercised after your other liability limits have been reached, most insurance carriers will have requirements that need to be reached before you can buy the coverage.

Most providers, for instance, will require that you carry around $300,000 in liability on your original homeowners insurance policy as well as $250,000 in liability on your car insurance policy. If you meet these requirements, you will be eligible for the extra $2 million in umbrella coverage.

Umbrella coverage will cost $150-300 per year for coverage of $1 million. Umbrella coverage us typically sold in $1 million increments, and the max coverage is usually $5 million. The second $1 million in coverage will cost an extra $75 per year, and you’ll be charged an additional $50 per year for every $1 million in coverage that you purchase after that.

Who is best suited for investing in umbrella insurance?

Any homeowner who has a retirement fund should invest in an umbrella policy. But, an umbrella policy is something most people should seriously consider. Remember that you have a lot more to lose than you may initially assume. Take into account your savings, your home, and any future earnings and investments. These are at risk if you are sued for a lot of money.

Many small business owners buy an umbrella policy to protect their business, and homeowners who have a swimming pool or trampoline on your property should consider it because injuries can easily occur in them. If you blog or post on social media, an umbrella policy can protect you if you are sued for slander or libel when you talk about controversial topics.

The summary is this: If you take part in activities or own possessions that increase your liability risks, it is a wise decision to purchase an umbrella policy to stay protected in the future. When you put it all in perspective, an umbrella policy is incredibly cheap when compared to the cost of a tragedy.

Hughesville MD Homes for Sale and Real Estate Services in Southern Maryland. You now have a search engine to help you with your Southern Maryland home search! And I’m ready to provide you with a custom home valuation if you’re considering selling your home. Let’s connect to discuss how I can help you. Contact Kimberly Bean at 301-440-1309

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