Umbrella insurance provides extra coverage to the policyholder when they are involved in a pending lawsuit dealing with injuries or damage that they caused. In the event that the lawsuit is more than the liability limits on the policyholder’s home, boat or vehicle insurance, then umbrella insurance becomes necessary.
Most umbrella policies provide coverage of $1 million or greater. The policy does things like cover paying for a lawyer, which can be a lifesaver because defense can costs thousands of dollars. Umbrella policies also provide liability coverage for lawsuits that are not covered by the policyholder’s home or car insurance policies. For example, the umbrella policy would help when a person is sued for an accident that occurs while they are driving a rented car.
A person who has a lot to lose from a lawsuit would benefit from an umbrella insurance policy. If the person has substantial assets or income they could completely lose in a lawsuit, then umbrella insurance provides a safety net. The policy cost is about $200 for the first $1 million of coverage, with $100 more for each additional $1 million of coverage.
Like other types of insurance, umbrella insurance is a way to get peace of mind. You know you will survive financially if you find yourself in court. You could find yourself facing the prospect of paying an injured person thousands of dollars for lost wages and medical bills. The umbrella policy will help to take care of this, as long as the policy is current.
It’s important to purchase a significant amount of umbrella insurance coverage. This is because you cannot increase the amount of coverage once the policy is active.