Umbrella Insurance

A traditional auto or homeowners insurance policy covers you up to a certain limit of financial liability. But when the amount of a claim exceeds this limit, you have to fork out your own money to cover the excess. And this can be burdensome and even can lead you to bankruptcy. For instance, if you have an auto insurance policy that covers you up to $15,000 and you had a car accident that led to a personal injury through your fault, you may become liable for an amount that is much greater then your coverage is. So, if you are claimed for $60,000, your insurer will cover only $15,000 and you should pay the rest of the amount. Not everyone is able to overcome a contingency like this. But there is a solution to protect you against unexpectedly huge claims and it is called "Umbrella insurance".

Umbrella insurance shields its owners from excessive charges. It covers you even if any other insurance plan stops paying. But don't get confused; umbrella insurance is not a substitution for your auto or home insurance policy. It can be considered as an additional plan. It expands your existing coverage for a reasonable price. Normally, umbrella insurance can be purchased for extra $200-$400 per year, but the price varies depending on different factors. These factors are the same that influence the price of your traditional insurance policy. However, it's worth of the money you pay, because you get a considerable coverage in return. Usually umbrella insurance covers you against liabilities up to $5,000,000.

Of course, there are some nuances you should be aware of. Most of insurance companies will not sell you umbrella insurance if you hadn't bought auto and home insurance with that company. This is because umbrella insurance carries high deductibles. Sometimes it exceeds the amount of two hundred thousand dollars. This is the amount you have to pay before umbrella insurance starts its contribution. That's why insurers ask their clients to buy auto and homeowners insurance that equals to the umbrella insurance deductibles.

But, not only your car and house are covered with umbrella insurance. The policy also includes coverage against personal injury. The terms of the coverage differ with each of insurance company and depend on local legislation. For instance it can protect you against eviction or false arrest.

Umbrella insurance is an excellent way to protect you against claims that exceed the coverage of your traditional insurance policy. It is not too expensive, but it can be very helpful when needed. However, sometimes it is better not to buy insurance at all. If you are a hermit that doesn't drive a car and never invites people to its home then you definitely do not need umbrella insurance. But if you are a typical citizen of your country that likes to drive cars and have extraordinary parties, then you definitely need to consider buying umbrella insurance.