Umbrella Insurance

What You Need to Know About Umbrella Coverage

What happens if a claim costs more than the limit on your home or car insurance policy? Unfortunately, any amount owed that is over your policy limit is your responsibility and can be financially devastating. The good news is you can easily protect yourself from large claims by adding low-cost umbrella insurance to your policy.

Umbrella insurance provides additional liability insurance that goes into effect when a claim exceeds the limits on your homeowners or car insurance policy.

An umbrella policy works with your existing home or car insurance—it can even cover some losses that home and auto insurance do not cover. You can purchase umbrella insurance in various amounts—from $1 million to $5 million or more.

How Does Umbrella Insurance Work?

Umbrella insurance goes into effect when there is a covered liability claim under your car or homeowners insurance policy that exceeds the coverage limits you have purchased on those policies.

Before you can purchase umbrella insurance, many insurance companies require you to carry a certain amount of underlying personal liability coverage on both your homeowners and automobile policies. In addition, you may also be required to insure both your home and vehicles through the same insurance company you are purchasing the umbrella policy from.

The big question is often “How much coverage should I carry?” The answer usually depends on your net worth. Calculating the value of your home, stocks, mutual funds, and retirement accounts is the first step to determining the amount of coverage you should purchase under an umbrella insurance policy.

Any claim amount exceeding your standard liability policy is your responsibility to cover. In order to cover the costs of a large insurance claim against you, you could be forced to use money from your current assets, such as savings accounts, 401(k)s, or even your home. Your future earnings could be at risk as well. While an excessively large claim or catastrophic event is unlikely, insurance companies offer umbrella policies for customers who want to protect their assets and feel more secure. The good news is umbrella insurance is very affordable.

Contact your Webber Advisors agent to find out how affordable an umbrella policy can be for you.