An umbrella insurance policy is one that provides extra coverage for a person when there is a pending lawsuit involving injuries or damage to property that was caused by the individual. If the lawsuit is more than the liability limits on a person’s home, boat or vehicle insurance, it is necessary to take out an umbrella policy.
Umbrella policies are significantly beneficial because they give additional coverage of $1 million or greater. The policy can also cover defense costs, which can be a lifesaver for the policy holder since defense costs can easily total over $100,000. Umbrella policies also provide the policy holder with liability coverage for lawsuits that are not covered by the individual’s present home or car insurance policies. For example, an umbrella policy would be necessary if a person is sued due to an accident involving a vehicle that was rented while the individual was on vacation.
People who are at risk of losing their substantial assets or income in a lawsuit should also take out an umbrella policy. The cost for the policy is about $200 for the first $1 million of insurance coverage and $100 for each additional $1 million of coverage. This makes the umbrella policy one of the most worthwhile to purchase.
Umbrella insurance can definitely provide peace of mind, since people can’t control who they get into an accident with. If an individual were to injure a professional athlete who makes a six-figure salary, the person would owe the injured party for lost wages and have to cover the cost of medical bills. This amount could easily be in the millions. However, the umbrella policy will help to take care of this, since it is impossible to be over-insured when it comes to lawsuits.
When purchasing an umbrella policy, it’s best for people to purchase much more than they think they will need, since it’s not possible to buy more insurance after the umbrella policy has been purchased.