Umbrella Insurance policy is a type of insurance that covers excess expenses after you have exhausted the limits of your auto insurance, home insurance, or boat insurance.
This type of insurance also covers events that your traditional insurance would not cover like slander, false imprisonment, defamation, etc.
What is included in umbrella Insurance policy coverage?
- Property damage
- Personal liability like; rental liability, bodily liability property damage liability.
What is not included in umbrella Insurance coverage?
It covers events beyond your regular home auto or boat insurance like
- Damage caused by the insured or household intentionally: if a child of the insured hits a visitor with his bike to get revenge, the umbrella Insurance policy won’t pay for that.
- Damage caused by the insured to his property: if the insured destroyed any of the property, by himself, the cost of repair or replacement is not covered under this type of insurance
- business liabilities: liabilities arising from your business or investment are not covered under umbrella Insurance.
- Liability as a result of war: most insurance does not cover war as the expense that comes with loss and damages as a result of war are too expensive.
- The liability is assumed under a contract signed by the insured.
How does Umbrella Insurance work?
Let’s examine these examples to understand how umbrella Insurance works
- Your car caused an accident and other road users sustained injury. For instance, if the cost of treatment for the injuries is estimated at $450,000 and your bodily injury limit on your car insurance is $320,000. The excess $130,000 is covered by your umbrella Insurance policy.
- Another example is, for instance, if you baked a cake for your child’s birthday party, his classmates ate it and started having a runny stomach, and then you were accused of food poisoning. Umbrella Insurance can take care of the expenses for the lawsuit.
- Also, your son gets into a fight at summer camp and punches the eyes of another child resulting in partial blindness, if you get sued, umbrella Insurance pays the bills
- Or while taking your dog for a walk around your neighborhood, it somehow unleashes itself and bit someone. If the person sues you, an Umbrella Insurance policy takes care of it.
From the examples above, you can see that an umbrella Insurance not only covers the insured but also members of his household. Once you have umbrella Insurance, your mind would be at peace financially even if you have an overactive teenager or dog who likes to escape its leash. Endeavor to know what and who a household consists of when purchasing the contract to know if it suits your needs.
Also, even if umbrella Insurance covers certain events and this coverage is worldwide, it does not protect the insured’s property.
Factors that affect the price of umbrella Insurance
The price of umbrella insurance differs from person to person and is determined by some factors namely;
- How much coverage
- Number of household members covered
- Number of properties covered
- Risk involved.
Is umbrella insurance affordable?
The cost of purchasing umbrella Insurance is quite low compared to other traditional insurance, this is because before one can purchase an umbrella insurance policy, most insurance companies require that you already own home and auto insurance. the more payments you’ve made on your home and car insurance the lesser the umbrella insurance.
Getting umbrella Insurance
No matter how careful we are, lawsuits may arise even as a result of the carelessness of a person from our household. Getting an umbrella Insurance policy would protect us from emergency situations where our home and auto insurance is limited.
When getting an umbrella Insurance it is advisable to buy from the same company you have your auto and home insurance, whether it is a prerequisite of the insurance company or not, as this helps to reduce the purchase cost.