Umbrella Insurance: Top 5 Most-Asked Questions

Umbrella Insurance: Top 5 Most-Asked Questions

Umbrella insurance is the must-have insurance policy that so many people don’t even know exists. When we talk to our clients, many people have never even heard of umbrella insurance, and they have a lot of questions. So we decided to compile the most-asked questions about umbrella insurance here in one easy blog for you. If you’re unfamiliar with umbrella insurance, get ready for a crash course that’s going to make you wonder why you don’t have an umbrella policy already!

  1. What is umbrella insurance?

An umbrella policy works ike an umbrella, covering all your other insurance policies with extra protection. Umbrella insurance kicks in when the coverage limits of your homeowners insurance, business insurance, auto insurance, etc. are exceeded by a lawsuit or claim.

For example, imagine this: you are at fault in a car accident with a Ferrari. Your auto insurance will only cover $300,000 in damages, but the Ferarri is totaled and the replacement cost is $500,000. Without umbrella insurance, you’d be left to pay the extra $200,000 out of pocket. But with umbrella insurance, your umbrella policy would kick in once your auto insurance coverage hits the limit, so you’d pay nothing out of pocket.

  1. Why is umbrella insurance important?

We live in a highly litigious society. Approximately 40 million lawsuits are filed in the U.S. every year, and you don’t want to find yourself on the business end of one of them.

Umbrella insurance protects you and your family from being sued in the event you are at fault in an accident where the damages exceed the limits of your other insurance coverage. Without umbrella insurance, a claimant could come after your house, retirement savings, and other assets to settle their claim.

  1. How much umbrella insurance do I need?

There’s not exactly a formula for how much umbrella insurance you need, but since umbrella policies are ridiculously affordable, you can usually get more coverage than you’d ever need for only a couple hundred dollars a year.

What we generally tell clients is to total up the entire value of all their assets including their home, vehicles, business, cash, investments, savings, etc. Then look at your insurance coverage amounts. Your umbrella insurance should cover the gap between each policy and the total value of your assets – at least.

  1. What isn’t covered by an umbrella policy?

While an umbrella policy is a great way to protect your family from the financial ruin caused by lawsuits, it doesn’t cover everything. Every policy is different, but some of the types of claims that can be denied by umbrella policy insurers include:

  • Bodily injury claims by certain “dangerous breeds” of dogs
  • Bodily injury that is not an accident, but caused on purpose
  • Lawsuits that occurred before the policy became active

To know for sure what is covered and what is not, speak to your insurer.

Ready to protect yourself with an umbrella policy?

Here at Edwards Insurance Agency in Taylors, SC, we help families all over South Carolina protect their financial future with umbrella policies that offer coverage as well as peace of mind. Give us a call today.