Do They Really Shield From the Rain?
Yes, if one wants to ensure adequate liability coverage is in place if a lawsuit or serious injury occurs. If you find yourself in an unfortunate situation, and your current liability coverage is not enough to pay damages, the person bringing the action can go after your home or other assets.
An umbrella policy supplements your current car and/or home insurance, providing a higher level of protection. It begins where your current coverage ends. For example, if your car insurance covers up to $500,000 per accident, your umbrella policy starts at $500,001 and pays until your pre-set liability limits have been reached.
How much do umbrella policies cost?
These types of policies are generally inexpensive as your primary liability coverage assumes most of the risk. For $200 a year, it is possible to purchase $1 million of additional coverage or more with an umbrella policy. It is also important to note that many companies will not offer an umbrella policy, unless both home and car insurance is also purchased from them. Additionally, insurers may stipulate what the limits of your primary insurance must be to purchase an umbrella policy on top of it.
Outside of the higher liability limits, your coverage is broaden to include bodily injury, property damage and personal injury (i.e. false arrest, false imprisonment, malicious prosecution, invasion of privacy, etc) you may have caused. It can also cover lawyers’ fees and other defense costs which can add up quickly.