You may be familiar with auto, boat and homeowner's insurance, but what about umbrella coverage? This term is not a mysterious insurance add-on to increase your premiums but actually offers critical help to those in an accident.
What Is Umbrella Coverage?
Regardless of the insurance type, umbrella coverage is simply an additional liability amount to cover excess charges. Sometimes, your original auto insurance policy doesn't cover exorbitant medical expenses, for example. There may be road damage from cars striking railings, along with medical bills. You are protected with umbrella coverage, depending on the monetary amount you select.
How Does It Work?
When you purchase your normal auto, home or boat insurance, you ask for an umbrella policy. This added amount is part of your monthly premium. If you have an accident or claim, your regular insurance activates. When you hit the limit of your policy, such as $200,000 for medical bills, the umbrella policy starts with its funds. Essentially, it covers you from damages, just like an umbrella in the rain.
What Kind Of Coverage Can I Purchase?
You can purchase almost as much coverage as you prefer. Some insurance companies can go as high as $10 million in coverage. The premiums, however, will be high for larger monetary amounts. For many consumers, they purchase an amount that is almost equal, or slightly below, their normal coverage. When an accident occurs, the insurer essentially has double the amount of coverage to keep all personal assets safe from legal wrangling.
What Major Benefits Does It Offer?
If you are in an accident with basic insurance coverage, and the expenses exceed your limit, the other party can potentially sue you for damages. Your personal assets are at risk, from homes to vehicles. Umbrella insurance protects your assets by offering a monetary amount to cover the extra expenses. Typically, there is enough between the insurance and umbrella coverage to adequately compensate everyone.
Umbrella insurance is a smart addition to any insurance policy. With protection behind you, there is no threat of legal issues, if an accident does occur.