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Umbrella Insurance

Updated: Apr 24, 2022

What is umbrella Insurance

Umbrella Insurance coverage always starts after your limits of the primary insurance limits are exhausted. The limits of umbrella insurance usually starts from a million dollars and up. Also umbrella insurance have minimum limit requirements to be met by the primary insurance before the umbrella policy can be issued. Umbrella Insurance also covers several situations which are not usually covered by the auto and home insurance policy. Umbrella Insurance is mainly used to protect your assets from lawsuits, court and jury awards. The liabilities may bankrupt you completely, so having the right limits is crucial. When the limits of your auto or home insurance is reached ,the insurance company may pay your entire limit and all the legal cost will be totally your responsibility. Umbrella Insurance will cover your legal costs.

Umbrella Insurance
Umbrella Insurance

What are covered under umbrella Insurance

  • Primary home

  • Vehicles - cars, boat, RV, etc...

  • Rental properties

Umbrella Insurance, usually covers body injury, property damage, legal costs and liabilities coming from tenants to the landlord.

Asset protection

Using LLC, land trust and other mechanism can be vital for your assets protection from lawsuits. For example if you use an LLC for each of your rental property, the law suit will be isolated to that particular LLC. But even a single rental property could be worth several hundred thousand dollars. An ideal solution is to have an umbrella policy for the rental property, so that the insurance will cover the liability cost up to a limit and only if the law suit if over the limit, you will be financially impacted.

Adapt your umbrella Insurance

Your net worth changes over time and the risk associated also changes. Some of the changes include buying additional vehicle, home or rental property. So as the changes happen in your life, the important thing about umbrella policy is to keep it updated. An annual review with your Insurance agent will be vital for optimal coverage and risk mitigation. Marriage, kids, inheritance are some of the examples which usually require a change in umbrella policy.

Umbrella Insurance cost

Most likely your umbrella Insurance cost will be few hundred dollars for one million dollar coverage. The amount you pay for the premium is very low compared to the coverage you get. You will be surprised how low the umbrella insurance cost can be.

Umbrella Insurance doesn't cover

Most likely your umbrella Insurance doesn't cover your personal property, criminal actions and damage not caused by any liability like flood, earth quake, etc...

The events and items covered by your insurance policy differs based on your policy and insurance provider. The conditions and limitations of the coverage vary upon your specific policy.

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