August 2, 2022
How Do Umbrella Insurance Policies Work?
Some people are more likely to need an umbrella policy than others, but how do they work, and why do you need one?
Uh, oh… Your spouse was just in a wreck that caused $600,000 in damages. Four hundred thousand of that is bodily injury. Let’s say that the bodily injury limits on your auto insurance are $200,000. Who’s going to cover the remaining amount? Your umbrella insurance policy might. It will cover the amount above the limit set in your auto insurance policy, up to the limit you choose for umbrella insurance policies.
Think umbrella insurance is an unnecessary expense? When you get into this type of situation, you may think differently. Not everybody has a few hundred thousand just lying around. How would an incident like this affect you and your family?
If you said “Yikes!”, you may want to consider adding an umbrella policy. Let’s take a look at what it is and why you need it.
What is Umbrella Insurance?
Injuries, property damage, specific litigation, and personal liability issues may all be covered by umbrella insurance. It’s insurance that goes above and beyond the terms and conditions of other policies. It covers not just the policyholder, but also other members of their family or household.
What Does Umbrella Insurance Cover?
Umbrella insurance offers protection beyond the scope of your other insurance policies’ limits or for potential claims that liability insurance may not cover. Typical home, auto, or boat insurance will not cover claims like false arrest, libel, slander, and liability coverage on rental units you own. However, umbrella insurance may cover these incidents. Umbrella insurance generally provides liability coverage for injuries, damage to property, certain lawsuits, and personal liability situations.
Umbrella policies likely won’t cover damage to your own property, damage that you or a covered member of your household caused on purpose, liability incurred in business or professional activities, liability you agreed to assume under a contract you signed, or liability related to war or armed conflicts.
Do You Need Umbrella Insurance?
Undoubtedly, fear plays a role in the choice to purchase umbrella insurance. Because of the lawsuit-happy society we live in, where anyone can sue you for anything and financially ruin you, many insurance companies claim that you need it. Numerous personal liability horror stories, where juries granted multimillion-dollar judgments to the victims that individuals had to pay, may be found in the news. But how probable is it that you’ll be in this circumstance? Are umbrella policies really necessary?
Some people are more likely to need an umbrella policy than others.
Let’s schedule a time to chat to see if an umbrella policy is right for you!
Call McKnight Insurance at 817-277-6166.
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