Like when it comes to considering purchasing any type of insurance, be sure to evaluate what assets you want covered and what the likelihood of you getting sued is. It may be more cost-effective to raise your liability limits with your homeowners insurance, rather than buying an umbrella policy. Also, by raising your deductible, you may ultimately pay less for your premium than you had originally been paying. No matter, with the commonality of million-dollar settlement verdicts, an umbrella policy may be the best way to go.
For example, if you own a swimming pool, hot tub, trampoline, swing set, or even pets, it would be a good idea to consider getting an umbrella policy. If you don't regularly have people over, and your pooch couldn't hurt a fly, it may not be that important. However, if you generally have guests over and your dog tends to snap or bite people, then purchasing an umbrella policy might be a wise idea.
What does a personal liability umbrella policy protect?
When you buy a personal liability umbrella policy, you are buying a broader insurance coverage range with higher liability limits. Primary policies generally cover bodily injury and property damage, but with personal liability umbrella policy coverage, you can include personal injury, property damage or bodily injury-which may be caused by you, your pets, or your dependents. Along with a personal injury protection, you may be covered in the unfortunate event of:
False arrest
False imprisonment
Defamation
Invasion of privacy
Malicious prosecution
Eviction
Wrongful entry
Some umbrella policies go as far as giving you coverage if you're charged liability while actively participating on the board of a charitable, religious or civic organization. It's important to realize that even if the lawsuit is frivolous or silly, you will still need to pay the expenses for defending yourself.
When umbrella policies go to work
After your liability insurance in your homeowners or car insurances has run out, umbrella polices will kick in. They cover the amount above what your homeowners or car insurance policies capped out, up to the limit you selected. Many companies will only issue you an umbrella policy if you have both your car and homeowners insurance with them. Also, they may require your liability limits be at least a certain amount. The reason that most umbrella policies are so inexpensive is that the policy is just added protection. If you are sued, the bulk of the cost is taken from your homeowners or car insurance, then the rest falls on the umbrella.
Umbrella policy exceptions
Umbrella policies vary from state to state, so depending on where you live, your umbrella coverage may not cover you for everything and anything you may be sued for. For example, many policies won't pay for punitive damages-which are generally used to punish people for their conduct. Intentional acts are another that may not be covered by an umbrella policy, as well as if a claim comes from a business endeavor.
There are always exclusions and loop-holes when it comes to umbrella policies, so be sure to talk with your insurance agent and fully understand what your coverage entails, so you don't get any funny surprises down the road. If you are interested in getting a homeowners insurance or car insurance quote, visit Insurance.com. Here you will be able to evaluate multiple rates from best-in-class homeowners and car insurance providers - helping you find the best homeowners and car insurance coverage for you and your family.
The price varies by risk, but someone with one house and two cars would generally pay about $200 a year for the first $1 million in umbrella coverage and another $100 for the next $1 million, says Bill Howard, an independent insurance agent in Alexandria, Va.
Umbrella policies are inexpensive because they kick in only after you?ve exhausted your liability coverage under your auto or homeowners policy. Most insurers first require you to have $300,000 or $500,000 in liability coverage on your car and home. For example, if you have $500,000 in liability insurance on your auto policy and a $1-million umbrella policy, you?ll have a total of $1.5 million in liability coverage.
Source: http://frytv.blogspot.com/2012/12/understanding-umbrella-policy.html
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