How to Buy Umbrella Insurance

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By leduncan
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Protect yourself from the storms of life

Anyone who owns a home, significant assets or even some small business situations needs an umbrella insurance policy. An umbrella insurance policy protects you and your family in the event that you are ever sued for damages in a lawsuit.

Umbrella insurance policies also protect you when you are away from your home or car, which are usually insured separately as well as legal fees to defend yourself in a law suit.

Examples of ways an Umbrella policy can protect you are if your dog bites someone or if you hit that line drive in Saturday’s softball game and break the pitcher’s nose.

Difficulty: Moderately Easy

Instructions

Step 1

Determine your affordability. Most umbrella policies are inexpensive. Normally, for less than $300 a year you can purchase more than one million dollars of coverage.
Step 2

Start shopping. Begin with the companies and insurers that you already have your other insurance policies through. Often you can save money by keeping all of your policies under one roof. Additionally, it keeps it easy. The company already has all of your information and they want your business. Don’t forget to ask if you qualify for a discount on the umbrella policy or your other policies by adding this policy to your portfolio.
Step 3

Find the right policy for you. Ask your insurance agent for a comprehensive breakdown of the offered policy. Determine what is and what IS NOT covered. Try to avoid any gaps between your home and auto insurance and your umbrella coverage. Most umbrella policies are set up to provide you $1 million in coverage AFTER your home or auto’s liability losses, usually set at $300,000. Cover those gaps if you can.

Tips & Warnings

To reduce your overall insurance costs, increase the deductibles on your home and auto policies to pay for your umbrella policy. Just make sure you have enough money in your emergency fund set aside to pay for these deductibles if you need to.
If you are operating a home-based business you may need a separate umbrella insurance policy to protect you against related risks. Depending on your business, $1 million may not be enough coverage. Discuss your situation with your insurance agent.
If you serve on a non-profit board you should investigate that the organization has Directors and Officers (D&O) liability insurance. Most non-profits do, some do not. It is worth asking before you accept a position on a board. If they do not, discuss obtaining the proper umbrella coverage with your insurance agent.

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