Insurance Umbrella Policy – What Does An Umbrella Insurance Cost

An insurance Umbrella policy is simply a supportive additional coverage that helps you beyond other insurance policies like auto or homeowners insurance. If you face legal charges for libel or slander, umbrella insurance helps you protect your investment accounts, assets, home accounts, and other legal expenses.

Furthermore, this umbrella policy also helps you with financial provision if you have assets that have injured another person on your property. It helps you with costs that exceed the limits of other insurance policies you own.

READ ALSO: Insurance USAA – Benefits of the USAA Insurance

How Does An Umbrella Policy Work?

The Umbrella insurance generally narrows the gap between your liability coverage and any outstanding costs associated with a claim. In simple terms, an umbrella policy provides financial backup for legal fees and other expenses beyond your underlying insurance coverage.

Generally, this insurance covers many costs after you pay the deductible on your auto, homeowners, or other insurance policy, but your costs reach that policy’s limit.

Insurance Umbrella Policy

How Can Umbrella Insurance Help Protect You?

With an example, we will show you just how an umbrella policy can benefit you. If you are caught in a car accident you caused, and the cost of treatment for the injuries of others is about $800,000, this is what happens next. If the bodily limit on your auto insurance is #$600,000, that is the amount that the auto insurance policy can cover. But what happens to the remaining balance of $200,000?

This is when your umbrella policy comes into play. It will cover the remaining fee, hence the limits set by the auto insurance policy. This is why getting an umbrella policy is important, as it acts like a ‘backup for a backup.’

What Does An Umbrella Insurance Cost?

The average Umbrella insurance costs range between $200 in annual premiums for $1 million of coverage. Still, the actual cost of the umbrella policy you purchase depends on the coverage you buy, where you live, and how many other insurance policies are under the umbrella policy.

How Much Umbrella Policy Do I Need?

If you want to determine the exact amount of Umbrella policy you’ll need, you start by totaling up the value of your property and assets. These assets include art, antiques, jewelry, stocks, bonds, 401(k), and so on.

Once you know the worth of your assets, you can have an insurance agent give you proper advice on the amount that suits you best.

CHECKOUT: Insurance Agency – Benefits of Using an Insurance Agency

Do I Need An Umbrella Insurance Policy?

You must purchase an umbrella policy if you stand a high chance of getting sued. You will have to purchase an umbrella policy if:

  • Are a landlord
  • Have massive significant savings and other assets
  • Are you worried about liability claims against you when traveling outside the United States
  • Host parties in your home
  • Are a public figure
  • Coach kids’ sports
  • Have an inexperienced driver in your household
  • Take part in sports where you might injure another person
  • Serve on a board of nonprofit
  • Post reviews about products and businesses
  • Own things that can lead to injuries, like a swimming pool, guns, trampolines, or dogs.
  • Own a property

It is still wise to adequately know what is fully covered in the Umbrella policy you purchase.

Factors That Affect The Rate Of Umbrella Insurance

These are factors that affect the rate of umbrella insurance or policy you get:

  • How much coverage you choose to buy
  • The features or assets in your home
  • Your location
  • The types of cars you drive
  • How many cars do you drive
  • Your claims history
  • If you own multiple homes

These factors affect the premiums of the umbrella insurance policy you get.

What Does The Umbrella Insurance Cover? 

This insurance policy can successfully cover major issues that might pop up in insurance dealings. Still, the insurance provides liability coverage for problems like:

  • Property damage to others
  • Bodily injury to others
  • Lawsuits such as libel, slander, defamation, and invasion of privacy
  • Legal costs to defend you in lawsuits related to such problems
  • Incidents that happen outside the United States.

These are key factors that are covered by the umbrella insurance policy.

What The Umbrella Insurance Policy Doesn’t Cover 

A key thing to know is that the umbrella insurance policy you purchase doesn’t cover your injuries and damages to your property. Here are other things that are not covered by the umbrella insurance:

  • Written or oral contracts
  • Criminal acts by you
  • Damage due to war, terrorism, or nuclear radiation
  • Business losses
  • Communicable disease, like a lawsuit against you for giving someone else herpes

These are key factors not covered by the Umbrella insurance policy you purchase.

Insurance Companies That Offer Umbrella Insurance

Here are certain insurance companies that offer umbrella insurance:

  • American Family
  • Chubb
  • Allstate
  • Auto-Owners
  • Erie Insurance
  • Travelers
  • Westfield
  • State Farm
  • Shelter
  • Progressive
  • Nationwide
  • Country Financial
  • Farmers

You can get the best Umbrella policy from these insurance companies and easily compare rates to get the best deals.

Frequently Asked Questions

Here are some frequently asked questions you can check out for more information:

Can I Get Umbrella Coverage For My Business? 

Yes, you can get a commercial umbrella policy to provide extra protection for your business. It can also provide more financial protection if you are being sued.

Should I Buy Umbrella Coverage If My House Has A Swimming Pool? 

Owning a swimming pool is one of the primary reasons you must consider buying an umbrella policy. This policy provides extra protection if a judgment passes the limits of your homeowner’s coverage.

Is An Umbrella Insurance Worth It? 

If you know you have significant assets, you must get an umbrella policy. If you face more legal issues, the umbrella policy helps you with more financial protection.

Does Umbrella Insurance Cover Dog Bites? 

An umbrella policy will provide financial protection if your dog bites someone else. Also, it helps you get more coverage if any other coverage or insurer doesn’t cover dog bites.