If you already have a home, car, health, life, and disability insurance as part of a strategic protection plan for yourself and your assets, you might not believe that you still need another type of insurance. But the truth is, the more your net worth grows, the more complex your financial situation gets, and — the more pressing it becomes crucial to consider umbrella insurance with your current policies.
Here’s what you need to know before applying for an umbrella insurance policy and why you should consider the coverage.
What Is Umbrella Insurance?
Umbrella insurance, often referred to as excess liability coverage, is a type of personal liability insurance that provides an extra layer of coverage beyond what standard home, auto, health, or other coverage might provide. An umbrella policy kicks in when you get to the limit for these policies and covers risks that were not covered.
Why Should I Buy an Umbrella Insurance Policy?
As we said earlier, umbrella insurance provides an extra layer of protection. If someone sues you, your standard policy will provide some liability insurance coverage to pay for judgments against you up to the limit set in your policy. However, umbrella insurance provides extra coverage if the judgment against you exceeds your coverage limits.
Other reasons to consider an umbrella insurance policy include certain activities that can attract the risk of someone suing you, such as:
- Renting out a commercial property you own
- Having a young driver or a dog in the house
- Owning a swimming pool and hosting pool parties
Keep in mind that certain limits must be met to purchase umbrella coverage since this policy goes into effect after the main coverage is exhausted. Most insurance companies will want you to have some money for liability insurance on your auto and homeowners policy before offering you an umbrella policy.
