Umbrella insurance is a type of liability insurance to protect policyholders from expensive claims. This kind of policy is an add-on to existing insurance plans, which may not offer high enough coverage for your needs. Let’s take a look at some of the pros and cons of this kind of policy.
Advantages of Umbrella Insurance
The most obvious advantage of umbrella insurance is that it offers coverage for claims which would exceed that of your existing home or auto policy. It also covers situations and circumstances not typically covered by most insurance policies, including psychological damages, libel and slander, traveling overseas, legal defense costs, and even false arrest or imprisonment. This policy keeps your home, vehicles (including motorcycles, boats, and RVs), and other personal assets from being seized in a lawsuit.
It is also relatively inexpensive to purchase umbrella insurance. Most applicants can secure a one million dollar policy for between $150 and $300 annually. Each additional million dollars worth of coverage can be added for very little more.
Umbrella insurance doesn’t just cover the policyholder – members of your family or household are also protected. This can be good news to households with new drivers or where large social events are hosted.
Cons of Umbrella Insurance
But there are also many reasons why umbrella insurance may not be right for you. For example, you may not meet the minimum requirements set by the insurer to apply for this kind of policy. You will have to already have a rather large coverage policy in place through the insurer before umbrella coverage is even an option.
You will also find that, as a liability policy, umbrella insurance only covers injuries to other persons or damage to their property. It can not be used to cover any injuries or damages done to the insured, members of their household, or their personal property. And while some additional situations are covered by umbrella insurance, there are still plenty of limits to this coverage. Intentional or criminal damages, damages sustained while performing business, and damages caused by specific recreational vehicles or dog breeds will be excluded from coverage. Be sure to go over these exclusions carefully with your agent.
Finally, umbrella insurance is just simply not useful for everyone to purchase. The truth is that many individuals will likely not need this kind of insurance unless they have a particularly high net worth or are at a specifically high risk of being sued.
For more information about who should carry umbrella insurance, contact Remco Insurance Services today.
