What is an Umbrella Insurance Policy
An umbrella policy protects your existing personal assets and future personal assets against the cost of losing a lawsuit over a car accident or an accident on your property. If you were to lose such a lawsuit, you would likely have to pay the winning party for costs such as medical expenses and lost wages, which can quickly become very expensive.
You don't have to be wealthy to need an umbrella policy - even if you don't have many assets, your future wages can be garnished.
An umbrella policy picks up where your auto, home owners, renters, and boat policies leave off. It typically has a high deductible because the deductible is designed to be met by your other policies.
What It Covers
An umbrella policy provides excess coverage above and beyond what is provided by your homeowners and auto insurance policies. For example, let's say your auto insurance pays $100,000 of medical expenses per accident and your umbrella policy is for $1 million. If you are sued for $900,000, your auto insurance would pay $100,000 of the damages and your umbrella policy would pay the remaining $800,000. Umbrella policies usually provide roughly $1 million to $5 million of additional coverage, it is possible to get more if you have lots of assets to protect.
What about the legal expenses you'll incur if you're sued? With most umbrella policies, legal expenses are covered on top of the policy amount. The policy may also pay you if your appearance at legal proceedings causes you to lose pay from work (for example, if you are an hourly employee or if you don't have any personal or vacation days available). Since the insurance company's money is at risk when you're sued, it'll want to protect that money with its own legal team, possibly a better legal team than you could afford on your own.
This is an important policy that most people should consider.
You Also May Be Interested In The Following Personal Line Coverage
Jackson Insurance Solutions is a full service independent insurance agency located in New Mexico. You may also be interested in the following coverage.
Personal Auto Insurance - Home Insurance - Renters Insurance - Rental Property Insurance - Umbrella Insurance - Motorcycle Insurance - Motorhome Insurance - Builders Risk Insurance
Mobile Home Insurance -Boat Insurance
Reference:
What is home owners insurance - Investopedia
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