The Basics of Umbrella Insurance and Its Do’s & Don’ts

Umbrella Insurance

Personal property is an asset that a person has acquired with their hard-earned money, and it would be painful to give it up. Thus, a person’s personal property is usually at risk if he or she is unfortunate enough to be involved in a lawsuit filed against him or her as a result of an accident that was not his or her fault. The lawyer’s fees and the amount of money the judge awards to the victim on the other hand can exceed the amount of liability insurance that covers your home, car, or other insurance.

What is liability insurance?

This is specific insurance for individuals, which covers legal defense costs, medical care, rehabilitation measures, and loss of wages for those who have been injured through no fault of their own. In these unforeseen cases, umbrella insurance can help.

For further explanation, let’s assume that A negligently causes an accident for B. For example, let’s assume that the court awards $300,000 to the victim, but unfortunately A’s auto insurance only covers $200,000. In this case, B’s umbrella policy pays the balance, i.e., another $100,000.

In the past, umbrella insurance was only available to the wealthy. Today, the situation is changing. Now, ordinary people are also interested in umbrella insurance to protect their personal assets. Umbrella insurance also offers protection in case of expiry of liability under other insurance policies. Umbrella insurance could used without incurring high costs. The additional liability protection and coverage far outweigh the additional costs.

Umbrella insurance is also beneficial for people who win the lottery or otherwise make a lot of money in a very short period of time. This is because there are some dishonest people around who are always trying to win money easily. There are chances that some of them will file false cases against you in order to dispossess you of some of your property. That is why it is always advisable to buy umbrella insurance Brooklyn to protect your personal property.

Umbrella insurance – Do’s & Don’ts

A friend once asked me why people were so stupid to spend money on umbrella insurance. I replied that it would be stupid not to. That surprised him. It is not surprising that most people never think of buying umbrella insurance and are content with individual physical insurance for their home, car, artwork, etc.

So what is umbrella insurance? Simply put, umbrella insurance is insurance that is in addition to any other insurance you have for your various assets. Usually purchased for up to one million dollars. It can cover medical, legal, and malicious claims that you are legally or contractually obligated to pay.

People who need umbrella insurance usually meet most of the following conditions

The degree of risk to you or your property.

Do you work in a profession where litigation is frequent (e.g. doctor, paramedic, physiotherapist, psychologist)? In this case, such a contract is absolutely necessary.

Do you have assets to protect?

As a general rule, people whose assets (home, valuables) exceed $1 million need this type of protection.

Do you have a history of settling claims?

If you or your liability insurer are inclined to settle a dispute, you should definitely do so. Your next opponent may not accept the settlement and demand legal action.

What should you look for when purchasing umbrella insurance?

Compare prices:

Visit websites like Cheap insurance or Esurance. Enter the requested information and most insurers require the policyholder to have both auto and home insurance to obtain umbrella coverage. If the primary insurance is with the same company, the premiums should be about 20% cheaper.

Include all assets:

Sometimes people forget that they have partial ownership (for example, fractional ownership of a boat or airplane).

Do it right the first time:

Constant credit checks by an insurance company to underwrite, cancel or rewrite your policy can be costly and detrimental to your creditworthiness. So shop around until you drop, but only decide to buy insurance once you are confident and have compared all aspects of the policy and provider.

Be conservative:

When it comes to insuring an umbrella, it’s not advisable to be overly covered. But it’s even more dangerous to save money, so make sure you know all the facts about your insurance coverage.








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