What is Umbrella Insurance? Why is it so important to have one?
Is the value of your assets exceed your auto or home liability insurance limits? If the answer is YES, then it’s a must that you have an Umbrella Insurance. Umbrella coverage protects you and your family when you've exceeded the liability limits on your auto and property insurance policy It extends well beyond in case, you're found liable for more than your insurance policies can cover. You can select liability limit up to $5 million depending upon your assets. Your assets, home equity, retirement savings, and more could be at risk if you are sued after an incident. Besides protecting the wealthy, umbrella insurance also helps you cover the cost of medical bills or liability claims due to injuries caused by A serious auto accident where you're at fault or harm caused to others by your dog. It also covers the cost associated with damage to vehicles and other property due to an auto accident where you are at fault. In case, where you are an owner of rental property, umbrella insurance will protect you against liability that you may face as a landlord such as your tenant's dog biting someone and you being held responsible for the injuries. Apart from these, this insurance also provides coverage if you are sued for slander, libel, false arrest, shock, or mental trauma.
For your better understanding here is a small example of how umbrella insurance work.
Let’s assume that a person is involved in a serious car accident (where he is at fault) and the cost of injuries he caused to others is $500,000 and as per his insurance limits the carrier will pay up to $300,000. But who will cover the remaining $200,000? Answer is: Your umbrella insurance policy will cover the amount above the limit set in his auto insurance policy, up to the limit he chose for his umbrella policy.