When it comes to insurance, you may have heard the term “umbrella policy” used. But if you’re not sure what an umbrella policy does, you could be missing out on a type of coverage that would give you extra security and peace of mind. In this article we’ll explain what an umbrella policy is, and why many people consider it to be beneficial.
When it comes to insurance, you may have heard the term “umbrella policy” used. But if you’re not sure what an umbrella policy does, you could be missing out on a type of coverage that would give you extra security and peace of mind. In this article we’ll explain what an umbrella policy is, and why many people consider it to be beneficial.
What is an umbrella policy?
An umbrella policy is an additional type of insurance coverage that supplements your existing auto or home insurance. It provides coverage that goes beyond the limits of your basic policies, so that you have protection if you are involved in a severe accident or are sued for a very large sum of money.
What are some of the benefits of an umbrella policy?
The main benefit of an umbrella policy is that it protects you in the event that you are liable for more damages or expenses than your basic policy will cover. If you are sued or held responsible for damages, your insurance would first exhaust the coverage in your basic policy, and if there were still expenses left after that, the umbrella policy would kick in to cover the difference, up to the defined limit.
One of the reasons people find umbrella policies to be so valuable has to do with the way assets are defined. If you are sued for a large sum of money, your assets are at risk. Most people understand that their assets include their home, vehicles, savings, and income. What many are not aware of, however, is that your assets also include your future earnings. This means that you can be sued for, and risk losing, not just what you have now, but what you may make in the future. For this reason, even people who do not have a lot of assets at the present moment may consider it a wise investment to take an umbrella policy.
How much coverage should you get in an umbrella policy?
For people who choose to purchase an umbrella policy, it’s commonly recommended to get $1 million in coverage—even if they don’t have that much in current assets, because the policy also protects future assets. More coverage can be obtained if your assets exceed $1 million.
Not sure if an umbrella policy is for you, or how much coverage you should get? Talk with Superior Insurance today. They will help you take stock of your risks and assets and walk you through the options that can benefit you most!
