In a recent blog article, I talked about liability insurance coverage. If you have obtained insurance rate quotes on your car, you know that automobile insurance is not cheap. If you have determined that you may need additional insurance on your car that is above the minimum required by state law, there is a cheaper alternative that may help.
Umbrella Insurance is an inexpensive way to add $1 million dollars or more of coverage to your insurance protection scheme. Often times this coverage can be found for less than $200 per year in premiums. In general, umbrella policies will cover not only your automobile(s), but also will cover your home or other property that you own. Because this coverage is so inexpensive, most companies do require that you carry larger limits on the underlying primary liability policy.
For instance, many umbrella policies require that you first carry automobile limits of at least $300,000. This is called the primary liability policy. Although, the $300,000 in liability coverage is not cheap, if you already have this, adding the additional $1 million in coverage is a very inexpensive addition to add a lot more in coverage for your protection of personal wealth against lawsuits. This is especially important if you have accumulated some measure of net worth you wish to protect. Because some insurance analysts suggest carrying insurance coverage that is equal to three times your net worth, umbrella insurance is a great solution to accomplish this goal.
As the name implies, umbrella insurance lies on top of other primary policies of liability protection that you own, e.g., auto and homeowners insurance. These primary liability polices protect you if a tragic accident occurs and someone is injured as a result of some fault of yours or that happens on your property. If the other person is horribly injured or killed in this event, the umbrella insurance policy can then add an additional barrier of protection between the event and your personal assets.
What if you or your own family member is horribly injured or killed because someone else is negligent? Umbrella insurance policies can also provide you and your family
an extra measure of insurance even in this scenario. In another blog article I took a look at Uninsured Motorist Coverage. There, I shared the frightening statistic that sixteen percent (16%) of Georgia drivers neglect to carry any insurance at all. Alternatively, many motorists carry only the Georgia required minimum limits of $25,000. You can probably easily imagine a horrifying scenario where a member of your own family is terribly injured or killed because of someone else's negligence. To worsen this scenario, what if the other driver does not carry insurance or does not carry enough to cover your or your family member's injuries and losses. An initial preventative step to mitigate this loss is to carry UM/UIM coverage. But there is more.
The good news is that for no or little more in insurance premium cost, you can obtain an umbrella insurance policy that also provides for UIM (Under Insured Motorist) coverage. Many companies offer this additional $1M in UIM coverage for about another $100-$150 in annual premium if they charge extra at all. This means your total umbrella insurance policy can provide $1 million in coverage for liability and UIM coverage; it may cost as little as $300-$350 per year.
If you are considering adding an umbrella policy, it is important to know that not all insurance companies that provide umbrella policies offer policies that carry UIM as well. Also, sometimes these companies change their standard policy. So if you have an old umbrella policy that you have renewed through the years, it may have at one time offered UIM protection, but not anymore.
It is a good idea to carefully check the terms of any policies you own both at the initial purchase and at each and every renewal period. You should also ask questions of your insurance company or insurance agent to know exactly what policy coverage is right for you, how much coverage you need, what coverage you are getting for your insurance premiums paid, and what types of situations your policy(ies) cover.