You already have the required insurance if you own a home and one or more automobiles. So, you feel assured that your assets are sufficiently covered for most accidents or natural disasters.
Unfortunately, the unexpected does happen to even the most prepared persons. That’s why you need to know about the benefits of umbrella insurance.
Umbrella insurance is another term for excess liability coverage. The following questions may help you understand the benefits of umbrella insurance and determine if it is right for you.
Why should I consider adding umbrella insurance?
Most people only carry the minimum required limits of liability on their auto and home policies. They don’t foresee losing everything they own in a lawsuit that exceeds their policy limits. That’s right. If you’re sued for damages after an accident, you can lose your home, belongings, savings, retirement funds, and more.
You should consider an umbrella policy if you:
- Have savings or other assets.
- Want to be protected from potential loss of income.
- Have inexperienced drivers in your household.
- Own a business.
- Own investment property or are a landlord.
- Have certain breeds of dogs.
- Have a swimming pool, trampoline, or other “attractive nuisances.”
- Participate in sports or activities where you could injure others, which may lead to lawsuits.
An umbrella policy also covers every member of your household, even if they don’t have their own insurance.
What are the benefits of umbrella insurance?
For an affordable monthly premium, all of your combined assets are insured and you’re protected from losses that aren’t covered in a standard policy. The policy can be customized for your specific needs and save you from financial ruin in the event of an accident or lawsuit.
Here are some of the pros and cons of umbrella insurance for home and auto owners:
- Covers incidents not provided for in a standard policy such as malicious prosecution or false arrest.
- Umbrella insurance applies wherever you are when an incident occurs.
- Kicks in with liability coverage when the limits of a home or auto policy have been reached.
- Affordable when compared to the amount of coverage it provides.
- You must have the minimum amount of liability coverage before an umbrella policy can be added.
- Most companies require that your other insurance policies be with their company before you can add an umbrella policy.
Umbrella insurance provides from $1 million up to $10 million depending on the provider. Keep in mind that the higher the limits, the more your premium will increase. On average, $1 million in coverage can cost from $150 to $300 per year.
How does umbrella insurance work?
Imagine a scenario where you cause an accident that results in a lawsuit. You are responsible for paying the costs that exceed the limits of your policy. The financial hardship could last for years.
Here’s an example of the benefits of umbrella insurance:
You cause an accident that results in property damage or injuries that total $400,000. Your insurance limit of liability is only $300,000. Where do you come up with the other $100,000? Dig into your child’s college fund? Exhaust your savings? Sell your home or cars?
You’re protected from such drastic measures if you have umbrella insurance. It will pay the $100,000 and your family won’t face financial distress.
How much excess liability do I need?
The amount of umbrella insurance you need typically depends upon your assets. How much are you likely to lose in a lawsuit? Calculate the value of your assets including savings, the property you own, and investment accounts, then subtract your debts (liabilities).
For instance, if your assets equal over $500,000, you should get $1 million in umbrella insurance, which is the lowest amount offered. The cost of this coverage varies depending on other factors.
Factors that determine the cost of an umbrella policy include:
- Your credit history
- Your driving record
- Where you live
- Potential future income loss
- Your net worth
Umbrella insurance is reasonably affordable when compared to the amount of protection and peace of mind you’ll gain.
If you already have a homeowners and automobile insurance provider, talk to them about adding umbrella insurance. Try to resist shopping around for the cheapest rates, because you may not get the right coverage for your needs.
Where can I buy the best umbrella insurance?
At Sandifer Insurance Agency, our insurance experts will be happy to talk to you about your insurance needs. We coordinate with some of the nation’s top insurance companies to ensure that you get the right coverage at the best rates available.
Whether you need homeowners, farm, commercial, auto, life, or umbrella insurance contact us today. We have over 40 years of experience in the insurance industry, giving our customers the trusted, reliable service they deserve and expect.
Reach out to us online, by phone, or stop by our convenient location near downtown Cheraw, SC. for a free quote.