What is Umbrella Insurance?

Understanding umbrella insurance is simple.

Umbrella insurance is personal liability insurance that can help you when you are found liable for a claim larger than your insurance policy covers. In essence, it’s insurance coverage for your already set insurance policies, to an extent.

Umbrella insurance is cheaper than other policy plans, and it covers both the policyholder and members of the family or household. It also covers injuries to others or damages to their assets as it is designed to protect the policyholder and/or the family in the event that they are in the wrong.

In some cases, umbrella insurance can cover certain liability claims that other policies may not claim, including libel, slander, false imprisonment, malicious prosecution, wrongful entry, invasion of privacy, and numerous other hazards.

Understanding an Umbrella Policy

To understand an umbrella policy, you have to account for your own life and where it could be more beneficial for you. Say you had a current home or auto insurance policy and ran into an issue where your insurance did not cover the total cost of damages. Having an umbrella insurance policy would protect you in that event regarding financial payment.

Umbrella insurance is excellent in a world where people like to sue one another. If you cause a 12 car collision and can’t pay everyone’s medical bills, your umbrella policy will cover the rest. Or if your child has a bad fight with a bully at school and punches them, resulting in a broken nose, whose parents then decide to sue you, your umbrella policy will cover the medical costs.

Realistically, umbrella insurance can be utilized for every person on the planet, and it is relatively cheap. However, the necessity for each person to have an umbrella policy will vary based on their own life and current insurance situation.

Do I Need Umbrella Insurance?

The need for umbrella insurance varies from person to person. If you engage in high-risk activities that put you at a greater risk of excess liability, you should consider opening an umbrella insurance policy. Risk factors include owning property, renting out said property, employing staff for your home, having a pool, hot tub, or trampoline, hosting large parties, and overall being well known to the public.

Overall, the more likely you are to be sued by another, the more of a reason to consider obtaining an umbrella insurance policy. By having an umbrella policy, you can sleep better at night, knowing you are protected to the fullest of your ability.

How Much Does Umbrella Insurance Cost?

Understanding the price of umbrella insurance is important. Pricing for umbrella insurance varies based on the state you live in, how much coverage you want to purchase, and the risk you hold from the insurance companies point of view. In essence, the more you want protected, the higher it will cost to have umbrella insurance.

However, umbrella insurance is cheaper in comparison to other insurance policies. According to the Insurance Information Institute, policies that are $1 million coverage are typically $12.50-$25 a month, or $150-$300 per year.

The reason umbrella insurance is cheaper than most policies is that it requires you to already be carrying plenty of other insurance policies before an insurance company will allow you an umbrella policy. Most companies will require that you hold the maximum liability coverage on your insurance policies before opening an umbrella policy.

What Does Umbrella Insurance NOT Cover?

Umbrella insurance policies are great because they cover any incident that the policy does not specifically exclude. However, no insurance policy is designed to cover everything. That is why umbrella insurance does not cover the following:

There are multiple ways to keep the cost low of obtaining umbrella insurance. That is why working with LKA Insurance Agency will best benefit you in finding the best umbrella insurance. We work with you and multiple insurance companies to find the best coverage policies for you. Book with us today!