How Does it Work?

Most homeowner and auto insurance policies offers some liability coverage. However, if you’re found at fault for a serious accident, this coverage may not be enough to cover all the damages or expenses. Once you reach the limit for your liability coverage from your basic insurance, your umbrella policy will take effect and supply the rest of the money. Most people with umbrella policies have $1 to $2 million of coverage, which is enough to entirely cover their damages or expenses in most cases.

You can also purchase business umbrella insurance for extra liability coverage for your company. Many professionals benefit from umbrella policies, including financial planners, investors, and psychologists. A business policy differs from a personal umbrella policy because it only focuses on liabilities that businesses may face.

Different Types of Coverage

Although umbrella policies provide coverage for many situations, they don’t cover everything. The purpose of the policy is to cover damage that you cause to another person or their property. Therefore, your umbrella policy will not cover damage to your own property. The insurance also doesn’t cover any intentionally harmful or illegal behavior, so if you purposefully vandalize someone’s home or car, you won’t be able to use your coverage.

People who are at a greater risk of being found responsible for damages should consider purchasing an umbrella policy. For example, someone who drives a lot for their job is more likely to be in a car accident. Someone who owns a pool and frequently has visitors over is at a risk of being sued if someone slips and falls.

Major Benefits

Umbrella coverage protects your assets if you have to pay high amounts in damages or legal fees. If the total value of your assets is worth more than the yearly cost of an umbrella policy, it may be worth it to buy coverage.