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Umbrella insurance can help you guard your liability against major judgments from lawsuits arising from a number of disputes. If it’s helpful to do so, consider it as something like a general liability insurance policy that adds liability protection on top of your vehicle or homeowner’s insurance policy.

Most people don’t think they’ll need umbrella insurance, but it’s often because they’re unsure of what it is, who it protects most, and how their lives could benefit by having it. Let’s take a look at some common questions people might have about umbrella insurance.

What Can an Umbrella Insurance Policy Cover?

As a liability insurance policy, umbrella insurance can provide some relief if you are sued for causing someone else’s serious injuries or property damage.

While insurance policies specific to your home or vehicles will probably have some built-in liability coverage, an umbrella insurance policy can protect you when this coverage runs out.

Umbrella insurance can help with the following and more:

  • Liability for serious bodily injury: Insurance policies for your home or vehicle may not provide enough liability coverage to afford someone’s medical costs when you’ve caused serious injury, but an umbrella policy can.
  • Liability for substantial property damage: Accidents involving your car or boat can cause a lot of damage to someone else’s property that your vehicle insurance may not be enough to cover.
  • Malicious prosecution: If you file a lawsuit against someone but are countersued for maliciously or wrongfully filing your claim, umbrella insurance can protect your liability.
  • Libel and/or slander: If you said or wrote something about someone that caused them harm by defaming their character, you can protect your liability in a lawsuit with umbrella insurance.
  • Landlord liability: You can protect your liability from a tenant renting your property who claims they were injured as a result of your negligent upkeep.

Who Really Needs Umbrella Insurance?

You don’t need boat insurance if you don’t have a boat, you don’t need renter’s insurance if you don’t rent, and you don’t need business insurance if you don’t own a business. There are many types of insurance policies out there where you can skip coverage because it simply doesn’t apply to you.

Choosing whether or not to purchase an umbrella insurance policy may not be so clear-cut. This is because almost anyone can benefit from having something in place to protect their liability. That said, people who benefit most from having an umbrella insurance policy in place are those who take account of what they stand to lose in a potential lawsuit and want to diminish that risk.

How Much Can an Umbrella Insurance Policy Cost?

Extra liability coverage isn’t as expensive as you’d think, especially if you already have a considerable income or amount of wealth that you’re trying to protect from a lawsuit. According to the Insurance Information Institute, a $1 million umbrella insurance policy can be purchase for around $150-$300 annually.

An additional million dollars of coverage may cost $75 more and $50 on top of that for each additional million dollars of coverage.

Such a pricing structure roughly breaks down as follows:

  • $150-$300 for a $1 million policy
  • $225-$375 for a $2 million policy
  • $275-$425 for a $3 million policy
  • $325-$475 for a $4 million policy
  • $375-$525 for a $5 million policy

Again, these are annual premiums, which means you can maximize your liability coverage for a reasonable annual payment on an umbrella insurance policy.

What Are the Possible Downsides of an Umbrella Insurance Policy?

An umbrella insurance policy can do a lot to help you protect your savings and assets like your home from a liability claim, but that doesn’t mean it doesn’t have its downsides.

Despite all of its “pros,” some of the “cons” of umbrella insurance include:

  • The cost, which although not unreasonably expensive may still be unaffordable for many.
  • A policy holder must buy the maximum amount of liability insurance from their other insurers, which means you can’t save on those policies by minimizing what you pay in liability coverage for them.
  • You may have to buy an umbrella policy through your homeowner’s insurance or auto insurance provider.
  • Umbrella insurance provides no coverage for damage to your property or your medical bills – it only protects you when another party is injured or their property is damaged.

How Can I Get More Information or a Quote?

If you’re interested in learning more about umbrella insurance or want to move forward by requesting a quote, let Insurance Specialists, Inc. be your guide. We’ve helped countless clients like you find the right amount of liability coverage they needed to protect their wealth from lawsuit judgments.

By taking steps now to protect what you own from someone who’s suing you for property damage or a personal injury, you can safeguard the best possible future for you and your family.

For more information, reach out to Insurance Specialists, Inc. by filling out our online contact form or by calling us at (888) 451-0883 for assistance.