Umbrella Coverage - Oro Valley Real Estate
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What is an umbrella policy?
A policy that provides additional liability coverage that kicks in after your other insurance policies have reached their coverage limits.
Personal Umbrella policies typically offer between one and five million dollars of liability coverage.
What does it cover?
An umbrella policy covers extra liability in the event of an accident after you initial liability has been exhausted. For instance, if you are liable for $1 million in a car accident and your auto policy covers $500,000 of liability, your auto policy covers the first $500,000. Your umbrella covers the remaining $500,000, assuming your policy covers the incident and you purchased that much coverage. If you are liable for $250,000 in an accident on your property and your homeowner’s insurance covers $300,000, your umbrella policy wouldn’t be needed.
Umbrella coverage is there for you when the unexpected happens. Your dog could bite the neighbor’s child, your teen driver could hit a cyclist, a guest could fall down your stairs. You could be held liable to others for the cost of damages – injuries, property destruction, emotional distress, lost wages, and more. It only takes one serious accident and a resulting lawsuit to put everything you own (and will own) at risk.
Why is it important?
Insurance policies have limits that help to control your premium costs. In addition, these limits help insurers ensure that they are able to fulfill their financial responsibility and meet the claims needs of their policyholders. But limits leave you with some exposure to financial loss, because any claims that exceed the amount of a policy’s limit must be either paid for out of your pocket or be unrecovered. An umbrella policy can fill the gap that exists between your limits and your potential claims.
Umbrella policies extend the coverage limits of many types of liability insurance policies such as home and auto. It can provide $1 million or more in additional coverage to each of those policies you have. For example, when an auto insurance policy has a $250,000 limit and you injure another person in an accident, the medical expenses and lawsuit could cost much more than that. Having the added protection of an umbrella policy gives you another $1 million or more to put toward those costs. This keeps your savings intact while satisfying the financial obligations you have. Umbrella insurance can also provide protection for situations that would be excluded by other policies, such as when you are accused of slander or libel. Umbrella insurance isn’t just for personal coverage; it can also be purchased by a business in order to extend the reach of its various liability policies.
No matter how aggressive your liability insurance policy limits are, the inexpensive addition of umbrella insurance is a great, affordable way to extend your protection and meet whatever comes your way in the future.