How Does an Umbrella Insurance Policy Work?

Umbrella insurance is one of those things that is built to give you “extra” protection for those just-in-case moments. It protects your assets over and beyond the coverage limits on your other insurance policies, such as auto insurance and homeowners insurance. That means you have extra insurance coverage for those policies.

What Exactly Does Umbrella Insurance Cover?

As a homeowner, you may have someone visiting your home. If they slip and fall, you could be held liable for their injuries and any other damages sustained. An umbrella policy is extra assurance that their bills will be taken care of without you suffering a huge hit. It helps avoid certain lawsuits and keeps your finances in order.

Even though your current homeowners policy should cover injuries and damages, there are instances where certain injuries are so extensive that they may not be covered, or at least not fully covered. You may be wondering, what could possibly be covered by this type of policy. Here are a few examples:

Property Damage

With an umbrella policy, any damage or loss to someone else’s property will be covered. That could mean you or someone in your family getting into an auto accident where they crash into someone's house.

Bodily Injury

Bodily injury is coverage in case an accident you cause or are responsible for causes injury to a person. For example, if you have a dog and they bite someone, or an auto accident that injures the driver and/or passenger in the other vehicle. Additionally, if you have guests over and they slip and fall on your property, those injuries will be covered under bodily injury.

Personal Liabilities

This type of insurance also comes in handy under other personal liabilities. If you are ever sued for slander or libel, or someone accuses you of malicious prosecution, this policy will cover your expenses. Although this type of policy is often ignored, discussing the possibility of having an umbrella policy in place to protect your interests with an agent can give you more information and peace of mind.

Who Needs Umbrella Insurance?

Adding this additional coverage to your policy is important to consider if you are someone that has a lot going on, whether you entertain a lot, have a number of individuals over, have a business to run or have other situations that could put you in a position to compromise your investments. If you use your automobile a lot to transport things or are just on the road a lot, having an umbrella insurance policy to supplement your auto insurance policy could be just the thing you need. Or, if you transport a number of people from place to place, this would come in handy if you were to ever get in an accident and someone got hurt. If you are a parent that transports a lot of kids from place to place, this is a policy that should definitely be considered.

Understanding how an umbrella insurance policy can meet your needs will benefit you in the long run. It’s always better to be safe than sorry. If you're not sure if you should have umbrella insurance, or if you're not sure how much coverage you should have, Escient Financial can help you answer those questions. Go ahead and...