Anybody can cause an accident that results in serious injuries, permanent disability or even death. All it takes is five seconds of daydreaming or distraction behind the wheel. Then comes the lawsuit. You can’t go back to your agent’s office and get more insurance to cover the damages, so having too much insurance is how you want to be positioned under the circumstances. That’s what umbrella insurance is for.
What it is
An umbrella policy adds extra tiers of liability protection in increments of $1 million for bodily injury or property damage. If your underlying policy limits are exhausted in a lawsuit, your umbrella coverage will pick up where those policy limits left off. That’s when you have another layer of umbrella coverage in whatever amount that you purchased.
The first level of umbrella coverage starts at $1 million, and most companies will insure up to $5 million. With a good claims history, that first $1 million will cost about $200 per year. Every $1 million increment beyond that will cost about $100. That extra layer of protection also covers your home. If you have a boat, just about any of the umbrella policies will also cover that. Many even cover claims like libel, slander, invasion of privacy or false arrest.
Who does it cover?
The general rule is that you, your spouse and children are all insured under your umbrella coverage. That’s great news, especially when your kids are on the road with the access to social media that they have both on and off of it. That’s about as far as your umbrella extends though. Every insurer has its own exclusions on umbrella insurance, so read your policy carefully. It might extend as far as your son’s college dorm room or off campus housing. If you have significant assets that you want protected, umbrella coverage is probably right for you, especially when you factor affordability into the equation.