Let’s face it, most of us have limited budgets when it comes to our insurance. And most people feel insurance is an expensive item. Generally, auto, homeowner’s, RV, and boat insurance policies cover liability for injuries or property damage suffered by a third party. Personal insurance policies are designed to cover accidents for which the insured person may owe tens or even hundreds of thousands of dollars. However, sometimes the person may be responsible for an accident so catastrophic that the damages are $1,000,000 or more.
What An Umbrella Policy Covers
An umbrella insurance policy covers excess of your primary homeowner’s insurance, auto insurance, and other primary policies. Here is an example. John Doe falls asleep while driving and hits a van with a family inside. The accident results in $600,000 of medical bills, but John Doe’s auto policy has a $500,000 limit. Fortunately, John Doe also has a $500,000 umbrella policy, and the additional $100,000 would be covered under the Umbrella.
When You May Need An Umbrella Policy
- Having rental property
- Owning a Boat, RV, or ATV
- Have a high net worth
- Owning a business
- Having teen drivers
- Own a swimming pool, trampoline, or swing-set
In addition, the umbrella may cover things like volunteer activities, statements made online, and certain business activities that a homeowner’s or auto policy might not cover.