Finance Globe

U.S. financial and economic topics from several finance writers.
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What is Umbrella Insurance?

What is Umbrella Insurance?

There is a good chance that your car and/or home insurance agent has discussed umbrella insurance with you. While some have purchased this type of coverage, others have put it on the backburner.

Before you decide for or against umbrella insurance, it is important to understand what this type of policy offers. Here are the two primary points to keep in mind:

•    It provides liability coverage in addition to the limits of your car and home insurance policies. This protection will kick in once your liability protection on these policies is used up.
•    It provides coverage for insurance claims that are excluded by other policies. This can include but is not limited to: slander, libel, and liability coverage on second homes.

What does it Cover?

Before you purchase an umbrella insurance policy, it is essential to fully understand what it covers. The only way to know for sure is to discuss this with your insurance agent. Most policies provide coverage for:

•    Property damage
•    Injuries
•    Some types of lawsuits
•    Personal liability

Do you need it?

Unlike car insurance, for example, there is no law stating that you have to carry an umbrella insurance policy. It is your decision as to whether or not you purchase coverage.

The best reason to buy a policy is to protect yourself in the event that your home or car insurance coverage is exhausted. This ensures that you have another insurance policy to protect you, as opposed to being forced to pay out of your own pocket.

If you are interested in umbrella insurance, if you believe this type of coverage would suit you well, here are three things to do:

•    Contact your car or home insurance agent for more information.
•    Request a quote from a minimum of three different companies.
•    Make a purchase based on your findings, taking into consideration the cost and coverage.

There are people who swear by umbrella insurance, as well as those who don’t consider it important. Even if you never purchase a policy, you owe it to yourself to learn more.

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Comments 2

Frank on Wednesday, 30 September 2015 12:29

Great advice Chris. I have umbrella insurance that I find very useful. I was able to get a great rate as I used the same insurance company as my car and renters insurance.

Great advice Chris. I have umbrella insurance that I find very useful. I was able to get a great rate as I used the same insurance company as my car and renters insurance.
Wanderer on Wednesday, 30 September 2015 19:20

The idea of getting pricing from different companies makes sense. However, insurance companies may not quote unless they are underwriting the homeowner (renters) and auto as they often tie in limits of liability and the base risk they are underwriting. Moral of the story is not all companies will offer Umbrella Policies without the total risk package. Speaking from experience.

The idea of getting pricing from different companies makes sense. However, insurance companies may not quote unless they are underwriting the homeowner (renters) and auto as they often tie in limits of liability and the base risk they are underwriting. Moral of the story is not all companies will offer Umbrella Policies without the total risk package. Speaking from experience.
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Saturday, 24 August 2019

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