Don't Forget the Umbrella (Umbrella Insurance, That Is)
By Kristi Vaughan
Auto insurance? Check. Homeowners insurance? Check. Life insurance? Check. Health insurance? Check. Disability insurance? Check. Umbrella insurance? What?
Think you’ve checked off all of the boxes when it comes to insuring your financial security? If you haven’t obtained personal liability umbrella, or excess liability, insurance, you’ve missed an important safety net.
What is umbrella insurance?
As its name implies, umbrella insurance “goes over” other insurances. In the case of individuals, this means it is liability insurance that covers claims exceeding the limits of your home and auto insurance. And, in an increasingly litigious society, this is a safety net you’ll be glad to have if you’re ever sued.
What does umbrella insurance cover?
Umbrella insurance generally covers the same risks as your homeowners or auto insurance, but up to a higher limit. Additionally, many umbrella policies cover personal injury claims such as slander and libel. If you serve on civic boards or commissions you may also want to consider an umbrella policy that covers you against any liabilities that may arise from such service.
How much do I need?
As with all insurance, the amount you need depends on the risks to which you are exposed. The insurance agent or company selling you the policy should be able to help you determine an appropriate amount. Generally insurance companies will require you to have at least $250,000 in liability coverage on your auto policy and $300,000 on your homeowner’s policy before writing umbrella coverage.
What will it cost?
Because umbrella insurance only kicks in after the limits on your auto or homeowners policies have been exceeded, it is relatively inexpensive. The Insurance Information Institute estimates that a $1 million personal umbrella liability policy will cost $150 to $300 per year. The cost will increase about $75 per year for the next million and $50 per year for every subsequent million dollars in coverage.
Where do I get umbrella insurance?
Because it is additional liability coverage, umbrella insurance usually is obtained through the same insurance company that provides your home and/or auto insurance. In fact, quite often you can get discounts by having one company cover all of your insurance needs. Give your agent a call.
