Umbrella Insurance And Why You Might Need It

Perhaps you have heard of an Umbrella Insurance Policy and have wondered why you might need one. After all, you probably have health, home, and auto insurance to protect your material and family assets in the event of unforeseen events that make insurance necessary in the first place. This article is intended to help you understand what an Umbrella Insurance Policy is so you can make an informed decision as to whether you require one or not.

Umbrellas cover us from drops of rain that might fall on parts of us we thought were covered but can still leave us wet and cold. This is why the term Umbrella Insurance was coined – to protect us from being left uncovered and out in the cold when we need it the most.

Umbrella Insurance And Why You Might Need ItMost of us would agree that we detest the idea of paying our hard earned cash for things we hope to never use. That is exactly what insurance is – a commodity we never want to use. So why do we pay it? Because not being protected in our litigious society where huge monetary rewards for lawsuits can be awarded is a real concern.

What Does An Umbrella Insurance Policy Cover?

What is in an umbrella policy for you? Think about your individual insurance policies and potential monetary shortcomings in what they cover. If your auto policy has a $500,000.00 liability limit and you are found libel for more than that the umbrella policy provides additional coverage. Typically the additional coverage is in one million dollar increments.

This is why the insurance companies created Umbrella Insurance Policies – to cover the monetary gaps in existing policies for their insured. Umbrella Insurance is designed to protect the owner of the policy against liabilities that slip through the cracks of their other policies. Umbrella policies are typically very low cost versus their prospective return.

The key to understanding Umbrella Insurance coverage is "liability."

What if the unthinkable happened and you were found libel for injuring someone in an auto accident and the jury awarded millions of dollars in damages to them. The right umbrella policy could prevent you from losing everything. No one intends to ever be libel for something like this, but it happens all the time.

The average monthly cost for a million dollar Umbrella Insurance policy is around $12.50 (when added to existing home policy coverage) and it covers a wide array of liabilities that are not covered under the standard policies most of us carry. It seems worthwhile to investigate this coverage when you do the simple math. Let’s say you purchase one million dollars of "umbrella/auxiliary" insurance coverage. So that means a small investment of $150 for year can protect you for up to $1,000,000. In this litigious society, it is definitely worth considering.