Combined with your home and auto insurance policies, an umbrella insurance policy is another layer of protection. Further, it may help during a lawsuit from driving or operating a rental. In addition, an umbrella policy may help if you’re sued.
What Is Umbrella Insurance?
Think of umbrella insurance -or personal liability insurance – as a safety net. Because, if you’re sued for damages that exceed the liability limits of your car insurance, homeowners insurance, boat insurance or other policies, an umbrella policy helps pay what you owe.
Umbrellas Start Where Other Policies Stop
Most Umbrella Policies sell in increments of $1 million. Umbrella insurance costs about $150 to $350 a year for the first $1 million of coverage and about $100 per million of coverage above that. The cost depends on where you live. Rates vary by state. Also, the number of homes, cars and boats you insure is equally important.
Is Umbrella Insurance Necessary?
Do you need an umbrella insurance policy? Because Umbrella insurance isn’t required by law, it is most often purchased by people who have a lot of assets to protect or a high chance of being sued. The more you want to protect, the more insurance you want to buy.
Buying An Umbrella Insurance Policy
First, talk to your insurance agent. Before selling an Umbrella policy, insurers require a liability homeowner and auto policy.
Second, learn about minimums: Homeowners is usually $300,000. Auto insurance is usually, $250,000 for injury to each person and $500,000 per accident.
Third, look at the bottom line: Insurance companies often limit home and auto liability policies to $500,000 or $1 million. Adding more policies costs more money.
Finally, compare numbers: It’s usually less expensive to buy an umbrella policy than to increase liability policies beyond the minimum required by your insurer.
The Merdes Law Firm has been helping injured Alaskans for more than 30 years. It’s who we are. And while we hope you never need us … We’re here if you do. ~ Ward Merdes
Sources: Kiplinger; Nerdwallet
Image source: Adobe Stock
