You may have heard of the term “umbrella insurance policy.”
Is this type of insurance something you need to consider as part of your insurance plan? Do you really need umbrella insurance?
We’ll answer frequently asked questions about umbrella insurance so you can make informed decisions for your situation.
What is Umbrella Insurance?
Umbrella insurance is additional protection when unfortunate covered liability events occur, much like an umbrella protects you from the rain and inclement weather. It’s extra liability insurance that can help protect you personally from covered lawsuits and claims beyond standard policy limits on your auto, home, renters, and other insurance policies.
Otherwise, your lifetime accumulation of assets, savings, and retirement accounts — as well as your future earnings — could be at risk in the event of a lawsuit where you are held responsible for damages or bodily injuries.
Contrary to what you may think, your auto insurance or home insurance policy limits won’t fully protect you against every risk. Those policies will cover the costs up to your policy limits, which is what you would expect.
But, if legal fees, medical bills, bodily injury claims, and property damage from covered claims are greater than your policy limits, watch out! You are personally responsible for paying those expenses out of your pocket unless you have umbrella insurance. And if a significant event or significant accident occurs and you face a lawsuit, you may lose your assets or even have to declare bankruptcy.
In summary, having this supplemental policy as part of your insurance portfolio reduces your risk exposure. Umbrella insurance kicks in once your liability limits on your insurance policies have reached liability limits.
Who Should Consider Umbrella Insurance?
In short, nearly everyone. Perhaps you may think that umbrella insurance policies only benefit those with high net worths – false! There are many life situations where these policies can provide additional protection, security, and peace of mind. Here are some questions to ask yourself.
• Own a home?
• Have savings, retirement accounts, or other assets?
• Have children at home?
• Have students at college?
• Own and drive a vehicle?
• Let others borrow your vehicle?
• Borrow someone else’s vehicle?
• Own specialty vehicles, such as a motorcycle, recreational vehicle, boat, jet ski, ATV, or golf cart?
• Do you allow others to ride in, on, or operate your specialty vehicles?
• Own pets or other animals?
• Host parties and guests at your home?
• Volunteer your time and services to a charitable organization?
• Use or rent shared access to a lake, dock, or land?
If you answered “yes” to some of these typical life situations, it’s time to seriously consider obtaining an umbrella policy.
What are the Benefits of Having Umbrella Insurance?
An umbrella policy provides extra protection for your hard-earned assets.
“In working with clients over the last three decades, I’ve seen first-hand where an umbrella policy was the saving grace,” W. Michael McBride, President of Mason-McBride says. “And when the client sees the potential personal loss when an event happens, they are quite relieved they added an umbrella policy to their insurance with us.”
And umbrella insurance is surprisingly affordable. Read on.
How Much Does Umbrella Insurance Cost?
According to TrustedChoice.com, coverage for an umbrella policy typically starts in the range of $150-200 per year for a $1 million policy. $1 million is the amount of coverage where basic umbrella insurance policies start. Your premium will increase if you choose a higher policy limit, such as $2 million, but it won’t necessarily double in premium cost.
As a starting point, it’s best to review your total net worth (your assets minus your liabilities) to determine the appropriate level of coverage. Next, contact us to discuss your options.
How Do I Purchase Umbrella Insurance?
At Mason-McBride, we understand that not “one size fits all” when it comes to insurance. That’s why we offer an in-depth interview and risk analysis to fully customize your umbrella policy, considering your unique needs and life situations.
As an independent insurance agent, Mason-McBride has an advantage over insurance companies. Our agency can compare umbrella insurance policies with several carriers and present you with options best suited for you and your family.
Want to Learn More?
If you have any questions about your coverage, or to review coverage options, please contact us. For helpful tips on other popular topics, check out our articles on Cyber Insurance, Commercial Crime Insurance, and Ransomware Developments. As always, we are here to help you, your employees, and your business with all your insurance needs — from commercial insurance to group benefits to personal insurance. Thank you for allowing Mason-McBride to serve you!