The average car accident costs about $21,000 in California. So if your auto insurance policy covers less than that amount, you might not be covered if you get into an accident. That’s when umbrella insurance can come to the rescue!
It provides extra protection so you’re better prepared for the unexpected. But few people carry umbrella insurance or even know what it is. If you’re one of those people, this insurance guide will explain what umbrella insurance is and why it’s important.
Keep reading to learn more about a coverage option that many Americans desperately need.
What is Umbrella Insurance?
Umbrella insurance is a type of liability insurance that provides additional coverage for damages beyond the limits of your other policies. The policy can protect against lawsuits, judgments, and settlements brought against you by others as a result of bodily injury or property damage.
For example, let’s say you have car insurance with a $500,000 limit. If there was an accident that caused damages totaling $2 million, umbrella coverage would kick in to protect you from paying out $1.5 million in losses.
Umbrella Insurance Guide
The main purpose of umbrella insurance is to protect you financially. The cost of this additional protection varies widely, but the policy starts at around $200 per year for every $1 million worth of coverage.
You might think that a million dollars is way too much coverage. However, your umbrella policy should match your net worth; not just what you have in cash or investments. When you consider the value of your home, cars, and other assets, a million dollars suddenly becomes a very reasonable amount.
Of course, you can apply for more coverage. However, umbrella policies are usually sold in multiples of $1 million.
Is There a Deductible on an Umbrella Policy?
When you purchase umbrella insurance, you usually don’t have to pay any deductible at all. In some cases, a deductible applies only if there is no other insurance that covers the event.
What Is Not Covered by an Umbrella Policy?
Umbrella insurance protects you from financial loss in a wide range of situations, but it doesn’t protect against everything. It’s important to understand what your policy does and does not cover. Here are some common exclusions:
- Your own injuries
- Damage to your personal property
- Expenses resulting from criminal activity
- Obligations under worker’s compensation
- Any act committed to cause harm or damage property
- Some business-related liability claims, such as breach of contract or defamation
What Are the Requirements for Umbrella Insurance?
Each insurance provider will have its own unique requirements. Most insurers require you to buy a certain amount of liability insurance before they will sell you an umbrella policy.
Keep Yourself Protected With the Right Policy
Umbrella insurance is one of the most important types of coverage you can have. It’s a relatively inexpensive way to protect yourself from financial loss in a wide range of situations, and it can save you thousands of dollars in potential liability claims. But this is only true if you get insurance from the right provider.
RBP Insurance is a reliable provider that can help you find the best insurance policy for your needs. Contact us today to start protecting your financial future.