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Compare umbrella coverage
Umbrella insurance can provide extra protection beyond what’s covered by your basic insurance.
Nobody wants to be liable for more damages than their insurance covers. That’s a sticky situation that could result in a huge hit to your net worth. To avoid getting into debt because of an accident, consider taking out an optional umbrella insurance policy.
What's in this guide?
What is umbrella insurance?
Umbrella insurance protects you beyond the coverage offered by your basic insurance. It’s especially recommended for individuals with significant assets, those who stand to lose a lot from getting sued.
Umbrella insurance will pay for what you owe beyond what’s covered by your home, auto or renters insurance. It can cover you for a wide range of scenarios:
- You’re at fault in a car accident and your costs exceed your auto insurance limits.
- Your child gets into a fight at school, and another child’s parents sue you.
- A worker on your property injures himself and seeks compensation for his medical bills.
- You’re sued for libel.
- Someone is hurt on your property while enjoying your playground, trampoline or pool.
- You hurt someone while skiing or hunting and they’re seeking a settlement.
Why should I buy umbrella insurance?
Umbrella insurance isn’t mandatory, but it could offer peace of mind. It gives you extra protection if you find yourself liable for more damages than your basic insurance covers.
To answer whether you need umbrella insurance, look at the terms of your current insurance policies. If you’re comfortable with the limits you’re insured for, then you might forgo umbrella insurance. Otherwise, it could protect you from heavy asset losses.
Who needs umbrella insurance?
Consider umbrella insurance if:
- You have a high net worth or a lot of assets, which could make you a target for a lawsuit.
- You regularly work with other people as part of your job, such as if you provide a service in other people’s homes.
- You hire people to work at your home, such as a gardener or cleaning service.
- Your dog has been known to show aggressive tendencies.
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How much umbrella insurance do I need?
Typically, the more assets you have, the more coverage you’ll need. Review things like your net worth, home value, retirement plans and even your interest. Consider how much coverage you have with your current policies and if you’ll need extra in the case something was to happen.
How much does umbrella insurance cost?
A $1 million umbrella insurance typically costs between $150 and $300 each year. The exact cost depends on your personal profile, such as your age and where you live.
How do I get umbrella insurance?
Before you can buy umbrella insurance, insurers will require you to already have significant coverage under your auto or homeowners insurance. However, if you don’t meet the minimum coverage amounts you may be required to increase your liability limits. If you lower your limits or your policy lapses, your umbrella policy starts paying after you’ve paid the maximum liability coverage amount.
Chances are your current insurer will offer umbrella insurance. You’ll most likely need an existing insurance policy with the provider in order to take out an umbrella policy or add it on to existing coverage.
Does umbrella insurance come with a deductible?
If your basic insurance policy — auto insurance, homeowners insurance — covers part of what you owe, umbrella insurance doesn’t have a deductible. However, if your basic insurance doesn’t pay for anything, you’ll pay a deductible.
Umbrella insurance in action
Your auto insurance covers you up to $500,000 in the event of bodily injury to others in a car crash. But what if you cause a multicar crash and the resulting medical expenses total $750,000? You’d be on the hook for $250,000.
If you have umbrella insurance, you could be covered for that extra $250,000. For example, your umbrella insurance could offer bodily injury liability of up to $500,000.
Umbrella insurance isn’t mandatory, but it could protect you if you’re liable for large expenses that your basic insurance doesn’t cover. Compare your options for adding umbrella coverage to your car insurance policy.
Common questions about umbrella insurance
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