Umbrella Insurance

While it has a strange name, umbrella insurance is only an additional liability coverage that gives you extra peace of mind.

Umbrella insurance is most frequently purchased in addition to a house insurance or auto insurance coverage.



Liability, or the potential expense you might incur to another party in the event that you were found to be at fault for something bad, is the focus of umbrella insurance. Often, it excludes losses you sustain personally, including those caused by damaged or stolen goods.

Typically, you would get umbrella insurance if the liability coverage limits of your primary insurance policy were insufficient for your requirements. Since your primary policy has already paid out in full, only the remaining balance of your expenses will be covered by umbrella insurance.

For instance, if you cause an accident that results in the other motorist needing medical care for $600,000 but your vehicle insurance policy only covers responsibility up to $500,000, your primary policy will pay out in full and the umbrella insurance policy will take over for the remaining $100,000.

Although there will be a restriction on the umbrella insurance coverage, this is less likely to be a problem. Contrary to popular belief, an umbrella insurance coverage may be more affordable. The premium often reflects the lower likelihood that the insurance will need to make payments, even though it covers significant potential benefits.