An umbrella policy provides additional coverage on top of your automobile, watercraft, and homeowners insurance. It’s used to cover expensive medical bills and repairs that your basic policies cannot. This type of insurance policy also covers not only the policyholder but also other members of their family.
On top of this, it protects you from claims that other policies do not, such as slander, libel, false arrest, defamation, and liability insurance on the rental units that you might own. With all those in mind, let’s dive deeper into how umbrella policies work and their coverages.
How It Works
Let’s look at an example of how an umbrella policy works. Let’s say you got into an automobile accident, and the damages are worth $500,000. However, your automobile policy’s limit is $300,000. If you don’t have umbrella insurance, you’ll have to pay the remaining balance out of pocket.
On the other hand, if you do have umbrella insurance, it would cover the remaining expenses. On top of this, it will also cover any expenses for the potential lawsuits you might face.
Why You Need Umbrella Insurance
You may think that you don’t need umbrella insurance because you already have a homeowner’s policy and automobile insurance excess. While that might be true, you still need this policy because the coverage stretches beyond what your basic insurance and liability coverage offer you.
It protects assets and helps pay for medical bills caused by accidents such as car accidents or injuries obtained on your property. As we have mentioned before, other members of your family are covered as well. If your spouse caused an accident or a family member gets sued over libelous claims online, your umbrella policy can help pay for the expenses and damages in the incident.
What It Won’t Cover
An umbrella insurance will not cover things such as personal injuries and property damage. We have health insurance that covers your medical bills and homeowners insurance that protects you from things like fire or theft. Aside from those, your business will also not be covered with this insurance. You’ll have to purchase a commercial umbrella policy for that.
Here are a few examples that umbrella policy won’t cover:
- Intentional damage or injury
- Criminal acts
- Written and oral contracts
- Damage to property
- Disease lawsuits such as giving someone STDs
Contact a Professional Today
Umbrella policies can be a hard concept to understand. That’s why you should call Farmers Union Insurance from North Dakota. We’ll teach you the ins and outs of the umbrella policy and provide you with reliable health, automobile, and life insurance. So, what are you waiting for? Talk to our professional insurance agents today!
