How to Shop for an Insurance Umbrella Policy
An insurance umbrella policy provides extra liability coverage for lawsuits and large claims against homeowner and automobile insurance policies. After other liability insurance is exhausted, an umbrella policy kicks in to make up the difference. It also covers claims not covered by homeowner or automobile insurance. The value of an umbrella policy typically ranges from $1 million to $10 million, according to Geico Insurance. Although the coverage amount is high, so is the deductible, so the premium on the policy is affordable.
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Instructions
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Gather all your insurance information for your home and vehicles. Liability coverage information and contact numbers for fact verification are especially important. An umbrella policy typically requires specific coverage limits on your other policies.
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Coordinate an insurance umbrella policy with your existing homeowner and automobile liability coverage. Umbrella insurance kicks in after the owner exhausts auto or home insurance liability. For example, if someone has $300,000 of liability coverage on their homeowner insurance policy, the umbrella insurance policy should be structured with a $300,000 deductible. Then, if the homeowner is sued for $500,000, the homeowner insurance covers the first $300,000, and the umbrella policy pays the additional $200,000. The owner pays only the deductible on the homeowner insurance. When deciding on the amount of coverage you need, chose a figure that covers all your assets. A typical policy covers $1 million. Those who live in expensive areas, or people who host parties, often need more coverage because of the higher lawsuit risk, according to MSN Money.
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Contact the company who holds your homeowner or automobile coverage for an estimate first. Dealing with one company eliminates the hassle of dealing with multiple companies who might argue over liability responsibility.
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Contact several additional companies for estimates on umbrella policies. Companies that write homeowner insurance policies or automobile insurance policies frequently offer umbrella policies as well. Review the quotes from the different companies before making your final decision. For clear comparison, use the same total coverage amount and deductible amount for each estimate request.
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Tips & Warnings
An individual who buys an insurance umbrella policy from the same company that provides his homeowner and auto insurance often receives a substantial discount.
Business owners with employees or clients who come to their homes need umbrella policies because homeowner insurance doesn't cover this type of liability, reports MSN Money.
References
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