An umbrella insurance policy provides additional coverage beyond the limits of other insurance policies, such as homeowners insurance, auto insurance or business liability insurance. In other words, if the limits of your primary insurance policy are not enough to cover a claim against you, an umbrella policy can cover the remaining costs up to the limits of the policy. For example, if you are in a car accident and the damages exceed the limits of your auto insurance policy, an umbrella policy can help cover the additional costs. Umbrella also fills in some of the circumstantial coverage gaps in many homeowners and auto insurance policies when the insured is accused of property damage or bodily injury. It usually insures the policyholder against $1 million in damages or more. A true umbrella policy will not only increase the insured person’s dollar limits for liability but also cover losses that are excluded by other forms of liability insurance.
Umbrella policies provide relatively inexpensive insurance protection, but coverage may be conditional in some respects. For the umbrella policy to pick up where the primary policy left off, the insured needs to remain covered by a company-mandated amount of primary liability insurance as part of an auto and/or homeowners’ policy.
Umbrella insurance is important because it helps protect you from financial loss in the event of a liability claim. Without umbrella insurance, you could be responsible for paying out-of-pocket for damages or legal fees that exceed the limits of your primary insurance policies. This can be especially important if you have significant assets, as a liability claim could potentially result in the loss of your savings, home, or other valuable possessions. With an umbrella policy, you can have peace of mind knowing that you are protected in the event of an unforeseen liability claim.
Essex Insurance Brokers can help you determine whether you should consider umbrella insurance. Call us at (847) 954-2222 or email us at [email protected].