Umbrella Insurance Coverage: How Not to Get Soaked

Umbrella insurance is an insurance policy that covers what other insurance products do not cover. Umbrella insurance policies, therefore, extend your coverage and protection from financial claims against your assets. In a world with ever increasing property values and financial desperation, umbrella insurance policies can provide you with the peace of mind that you need to get through the difficult times in your life.

What Umbrella Insurance Covers

Umbrella insurance is intended to cover deficits in your property insurance coverage. For example, it can cover the difference between the coverage cap for your auto insurance and actual damages. In this case your auto insurance may cap at $50,000 for property damage when the actual cost of property damage caused by your vehicle was $100,000. The umbrella insurance policy would cover the $50,000 in damage not covered by your auto insurance. Umbrella insurance not only can be used to supplement auto insurance, but it can also be used to supplement real estate property insurance. It can be used to cover liability for accidents that occur on your property, such as multiple individuals are injured in a fire on your property.

How Much Do You Need

The amount of umbrella insurance coverage you need will depend on the limits of your other insurance policies. A good way to calculate your ideal umbrella coverage is to compare your available assets with the amount of insurance coverage you already have. Here you will want to add up your property value, your vehicle values, any tangible assets you have and the value of any savings or retirement funds. In the event of a major accident that you are liable for, these assets will be vulnerable to seizure to pay that liability. If your auto, home and other insurance policies do not cover these assets then you are at risk. The difference between your coverage and your assets is the minimum amount of umbrella you will want to get.

Where to Get Umbrella Insurance

Umbrella insurance is offered by most insurance providers that cover automobiles and homes. Talk to your insurance agent to see if they offer this coverage or if they can recommend someone else that does. When you meet with your insurance agent to purchase umbrella insurance make sure you know your numbers. A good way to know your numbers is to create a very basic spreadsheet that lists your assets and their values and in a separate set of columns lists your insurance policies and coverage limits. This document can be used by you and your insurance agent to determine how much coverage you need and what coverage options and discounts you qualify for.

In the end your umbrella insurance policy needs to be a balance between added security and financial sensibility. You do not want to spend a lot of money on this insurance policy, but you do need to provide yourself with a minimum amount of coverage and protection.