Have you ever heard of an umbrella policy and thought, “what does that mean?”
Well, picture this… you run a red light and T-bone another car. The car suffered significant damages, and the two passengers are seriously injured. Their car needs $25,000 in repairs, and treatment for the passengers’ injuries are $275,000. Also, the driver of the car will have to miss at least a month of work due to the injuries, so he sues you for $200,000.
You have $300,000 in liability coverage, but the other $200,000 will have to come out of your pocket.
This is where personal umbrella insurance may come into play. An umbrella policy provides additional liability coverage. It pays the difference between what your primary insurance covers and what you still owe, up to the umbrella’s policy limits, which will give you a piece of mind in situations like this.
What does personal umbrella insurance not cover?
Umbrella insurance does not cover your own injuries or property damage. It will also not cover incidents that were caused on purpose by you, it only covers accidents.
Why do I need a personal umbrella policy?
Life can change in an instant. While everyone should consider an umbrella policy, there are some people who should consider it even more. Those with a high net worth, teenage drivers, or those who have homes with a swimming pool, may have higher risk and more to lose.
Here are some examples of situations that could use an umbrella policy.
- You’re driving your boat and hit a water skier or someone swimming
- Your teenage driver causes a major accident
- A guest is seriously injured or dies in your swimming pool, trampoline, or swing set
- You cause a fire that damages neighboring homes
What is covered in personal umbrella insurance?
Liability coverages in an personal umbrella insurance policy may include Bodily Injury and Property Damage.
- If you’re involved in a bodily injury or property damage suit, a personal umbrella policy can pay the costs of the investigation, defense, and settlement of a covered claim (up to the policy limits) if your insurance has been exhausted.
- If you lose earnings by complying with our requests during defense proceedings, we will pay you up to $250 a day (a maximum of $5,000) for your loss.
How much umbrella insurance do I need?
Personal umbrella insurance is usually sold in increments of $1 million, and you want to make sure you have enough liability to cover your assets. To know how much personal umbrella insurance costs depends on a few things - where you live (this varies by state) and how many homes, cars, and boats you’re insuring. It’s important to talk over all of this with your agent and they will help you decide how much umbrella insurance will cover you.
Don’t wait to add this coverage, accidents can happen at any moment. For more information on a personal umbrella policy, contact your Alfa® agent today.