An umbrella policy is a safety net. It supplements your standard insurance policy, covers a much higher limit, and protects you from an unforeseen one-off event.
There’s a tragic accident on your property and you’re held responsible for someone’s injuries or loss of life—your umbrella policy protects you up to the policy limit.
You’re faced with a lawsuit from another party—your umbrella policy protects you up to the policy limit.
You, or a dependent, are involved in an event that incurs legal fees—your umbrella policy protects you up to the policy limit.
In the event that you need to make a claim, your umbrella policy will pay out after your standard insurance policies have been exhausted. If the claims exceed the coverage offered by your umbrella policy, you will be liable for the remaining amount.
The level of coverage will depend on the level of premium—the more you pay, the higher the policy limit will be. Typically insurance umbrella policies are available at around $150 to $200 for $1-million coverage. You can choose higher coverage, but if you do your premium will also increase.
How much coverage do you need? As with all insurance, you need to weigh up the costs and the risks involved.
• If you work from home, you are less likely to cause an accident than someone who drives to work every day.
• What assets do you have? You will want to protect them—in a legal case all your assets are vulnerable.
• What is your income? You can insure against loss of current income and future earning potential.
As with all insurance policies an umbrella policy comes with many questions. Talk to your agent—they will be able to find the right policy at the right price for you and your specific needs.