Taking out insurance can be a great way to protect your interests and safeguard your finances. However, most people need multiple policies to get the coverage they need. You might have car insurance for your vehicles, health insurance for medical costs, and home insurance for your residence, for example.

While individual policies can provide an impressive level of coverage, it’s difficult to keep up to date with exactly what level of coverage you have under each policy. For example, do you know off the top of your head how much the excess is on your home insurance policy or the limit of legal coverage that your car insurance policy includes? If not, it could be a sign that you need umbrella insurance!

What Is Umbrella Insurance?

Umbrella insurance is personal insurance that’s designed to offer extra coverage that goes beyond what your regular insurance policies offer. While it doesn’t directly cover your property, it does cover injuries to other people and/or damage to their property.

Every standard insurance has a maximum claim limit, although this is often made up of several components. If an incident occurs and your liability exceeds your claim limits, you would need to fund the additional costs or compensation payouts yourself. With umbrella insurance, however, these costs can be covered so that your savings and assets remain secure.

To get a better idea of how umbrella insurance works, look at the following example:

A guest at your home trips on uneven paving stones in your backyard and sustains a broken leg and head injuries. They subsequently sue you for their medical costs, pain and suffering, lost wages, and future loss of earnings. They’re awarded a compensation payout of 2 million dollars.

Your home insurance policy has a maximum payout limit of $1 million, which means that you’re personally liable for the remaining $1 million that still needs to be paid. To cover this, you might need to empty your savings, sell your assets, and cash out investments.

With umbrella insurance, however, the outstanding 1 million dollars is covered by the policy, so your personal finances remain unaffected.

As you can see, the right type of umbrella insurance can save you from financial ruin and the stress associated with an outstanding lawsuit.

When Can Umbrella Insurance Be Used?

Every insurance policy is different, and this applies to umbrella insurance policies. Because of this, it’s important to get independent and impartial advice when deciding what type of insurance to purchase and which provider to use.

Umbrella insurance can be added on to home insurance policies and auto insurance policies. It also can cover every member of your household, rather than just the policyholder. Think of it as a viable way to protect your family’s interests.

If your child inadvertently damages a guest’s expensive computer equipment, for example, umbrella insurance can ensure that you have the right level of coverage in place to fund a replacement and lost wages that might arise from the situation.

Alternatively, if your dog bites someone on your property, umbrella insurance can provide the enhanced coverage you need to fund their medical bills, physical rehabilitation, and compensation for lost earnings and pain and suffering.

With so many situations where it can come in handy, it’s easy to see why umbrella insurance is becoming increasingly popular among homeowners.

What Are the Benefits of Umbrella Insurance?

If you’re not sure if umbrella insurance is right for you, just look at some benefits associated with it:

1. Low Cost

In most cases, an umbrella insurance policy can be obtained relatively cheaply. This means you can extend your personal liability coverage by a significant amount with minimal outlay. With cheap premiums, it’s an easy and low-cost way to enhance the level of protection your family benefit from.

2. Protect Your Assets

Material items may not be the most important thing in the world, but you spend your life investing in your home and your assets. When someone makes a compensation claim against you, your property and assets could be in jeopardy, particularly if your standard insurance policy doesn’t provide enough coverage to pay the associated costs.

With the right type of umbrella insurance, you can ensure that your home and your assets are safeguarded and reduce the likelihood of them being put at risk if someone takes legal action against you.

3. Enjoy Peace of Mind

Insurance should give you peace of mind that yourself, your family, your possessions, and your assets are properly protected. However, it’s not unusual for personal injury lawsuits to result in settlements that stretch into millions of dollars and few standard policies will cover this. By taking out umbrella insurance, you can enjoy peace of mind knowing that you have the level of coverage you need, no matter what happens.

4. Flexible Policies

Although every umbrella insurance policy is different, they’re typically fairly flexible. As they cover members of the household, rather than single policyholders, they can cover a wide variety of situations and, therefore, many types of potential claims. This effectively improves the applicability of your umbrella insurance policy, without you needing to take out multiple policies or plans.

5. Limit Your Liability

If someone attempts to sue you, but you don’t believe you’re responsible for the incident, you may defend the action in court. However, you’ll need to fund the costs of your legal defense, unless your insurance policy covers this. With enhanced protection via umbrella insurance, you could mount a comprehensive defense that allows you to show that you’re not responsible and, therefore, not liable.

Finding the Best Insurance Policy

With so many benefits associated with umbrella insurance, it’s easy to see why so many homeowners view this type of coverage as essential. However, it’s vital to take out the right type of policy if you want to get the best level of coverage. For help and advice, contact Rosell Insurance Agency now.