What is Umbrella Insurance? | Your Insurance Question

In insurance we do a lot of talking about how to protect you when things go wrong. What?s sometimes overlooked is what happens when you?re the cause of things going wrong. In these situations, umbrella insurance could make a huge difference. Unfortunately, a question often asked of insurance agents is, ?what is umbrella insurance??

To answer that question, let?s look at a potential nightmare scenario. You have guests over for a barbecue in your backyard, and one of your friend?s children trips and hits their head. The family blames uneven paving in your backyard and you get sued for medical costs and damages. If the liability portion of your homeowners insurance doesn?t cover the cost of a potential settlement, you?re left with a hefty bill. But Umbrella insurance could prevent that.

Umbrella Insurance means extra Liability Coverage

So what is umbrella insurance? Umbrella insurance is extra liability coverage that kicks in after the liability coverage on your homeowner or auto policy is exhausted. The coverage it provides adds to the coverage on the original policy.

There are two key factors in umbrella insurance coverage, the value of coverage and the level it kicks in at. So in our nightmare scenario, let?s say the claim value was $500,000; but the liability limit on your homeowner?s policy was only $300,000. You would need Umbrella insurance coverage that kicks in at $300,000, with a coverage amount of at least $200,000.

Umbrella Insurance provides Flexibility

Umbrella insurance covers your liability on both your homeowner and auto policies at once; it?s called an umbrella policy because it protects all the policies underneath of it. This flexibility is umbrella insurance?s greatest strength. By taking out an umbrella policy, you give yourself extra liability coverage no matter what goes wrong. It provides equal coverage in our scenario or if your car crashes into an expensive Mercedes.

The answer to the question, ?what is umbrella insurance?? is a simple one. It means extra liability coverage and extra peace of mind. The real question is, ?why don?t more people have umbrella insurance??

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Have a question about umbrella insurance or liability coverage? Ask it here and get an answer from an expert.

Source: http://www.yourinsurancequestion.com/blog/yiq-blog-what-is-umbrella-insurance-2/?utm_source=rss&utm_medium=rss&utm_campaign=yiq-blog-what-is-umbrella-insurance-2

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