July 30, 2006
Explaining Umbrella Policies...
What happens when your policy has paid out all you can claim?
There’s no reason to worry if you have an Umbrella policy. When the homeowners policy that you have ends up paying out all that you can claim you will not be minus coverage if you have the Umbrella coverage.
Liability coverage can range from serious injuries resulting from tragic accidents to law suits filed against you and they can often creep up on you unexpectedly. This is also where you may need some extra protection.
Umbrella policies supplement liability coverage offered by your standard homeowners and auto policies. It can also be called an extra shield for you over and above your standard polices.
Let me remind you that most of the risk is still taken by the standard homeowners policy. Also the reason why it’s not expensive - You can buy a $1 million or larger umbrella policy for less than $200 a year.
Insurance providers are happier selling umbrella policies if you already have auto or home policies. Umbrella policies are usually sold with a deductible that might run anywhere from $250 to $1,000. Each additional $1 million of coverage is less than $100. The larger your basic liability limit, the less excess-liability coverage you need and the lower your premium for excess coverage.
Umbrella insurance is sold as a separate policy from your basic policy. Even umbrella polices are not enough sometimes - Keep in mind an umbrella policy won't cover claims arising out of a business endeavor.
The umbrella policy won't cover intentional acts, unless there are extenuating circumstances. However in the kind of society we live in where every one sues at the drop of a hat, having an umbrella policy may be a good idea.
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