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How to Choose the Best Umbrella Insurance for Your Property

You worked hard for your assets. But what if you faced a lawsuit exceeding your home and auto insurance coverage?

A recent study of individuals with assets of $5 million or above found one-in-five of people in this situation did not have an umbrella policy. Nearly one-in-four of individuals in this situation had less than $5 million coverage, which means they are underinsured.

Umbrella Insurance Coverage - from Save-On Insurance Services

The best umbrella insurance adds extra coverage to protect your assets and fill in the gaps of insurance. Let’s find out how you can find the best umbrella policy.

What Is An Umbrella Policy?

You already have some liability coverage in your auto and homeowners insurance (or renters) policies. If you were sued, the policies would only cover your policy limits. In today’s society, lawsuits could quite possibly go above and beyond the coverage you have. We’ve heard some of the enormous settlements in the news.

Umbrella policy coverage is pretty broad and covers all incidents that are not excluded. Other insurance policies cover named perils (or incidents) only. An umbrella policy will take over after you have reached your liability limits in your other policies.

What Does An Umbrella Policy Cover?

Let’s take a look at a common scenario… Your auto policy covers $300,000 in medical expenses. Your umbrella policy is for $1 million. You are sued for $900,000. In this case, your auto insurance would pay for the $300,000, then your umbrella policy would kick in and cover the remaining $600,000. Your auto policy limit was $300,000, so without that umbrella policy, you would have been out $600,000.

In addition, the best umbrella insurance policies also cover:

  • Legal expenses
  • Attorney fees
  • Loss of wages (current and future)
  • Dependent children for their losses (i.e. car accidents)
  • Slander
  • Libel
  • Defamation of character
  • False arrest

An umbrella policy also covers extensive property damage in most cases. For example, if there are multiple vehicles in an accident, the claim could easily exceed policy limits. Umbrella insurance would take over after the auto policy limits are reached.

Do You Need An Umbrella Policy?

Don’t purchase an umbrella policy out of fear alone. Most advisors recommend an umbrella policy if your total assets (including bank accounts, investments, and property equity) are greater than your auto and homeowners liability. Other advisors recommend getting at least $1 million of umbrella coverage, if you have more than $1 million in assets or earn more than $100,000 annually.

If you own any of the following, you may want to consider an umbrella policy:

  • A swimming pool
  • A rental property
  • A trampoline
  • A hot tub
  • A dog

Other questions you should ask yourself:

  • Do you host large parties?
  • Do you employ household staff?
  • Do you have a teenage driver?
  • Are you a public figure?

If you answered yes to any of these questions, you may also want to consider an umbrella policy. In a nutshell, if you have a higher chance to be sued, you should discuss the best umbrella insurance with your insurance agent.

An Umbrella Policy is a Wise Investment for Landlords

If you are a landlord, you are responsible for the safety of both your residents and guests on the property. This added liability is a perfect reason why landlords should consider an umbrella policy. A few scenarios where an umbrella policy would protect a landlord include:

  • A visitor falls on a broken step or crack in the pavement.
  • A guest is injured at the pool or workout facility on the property.

You may also want to consider an umbrella policy if you rent a vacation property. The same principles apply.

Umbrella Insurance Options

What Does an Umbrella Policy Not Cover?

A general umbrella policy does not cover business lawsuits. It is a personal insurance policy. For business coverage, talk to your agent about a commercial umbrella policy.

Umbrella policies do not cover typical flood damage. The policy will only cover bodily insurance or property damage to a third party.

There are times when an umbrella policy might cover flood loss. For example, if you live in a multi-family unit like an apartment or condo and you cause damage to a neighbor’s unit because you forgot to turn off your sink or bathtub, which then overflows. Your umbrella policy would likely cover you in a lawsuit or large claim.

Umbrella policies do not cover the following activities:

  • Drag racing
  • Crimes (such as DUIs)
  • Intentional acts (i.e. discrimination, sexual harassment, intentional injury, and willful and malicious acts)
  • Excess health insurance

If you are worried about a specific scenario, talk to your insurance agent. Umbrella policies will vary. You will need to find the best umbrella insurance for your needs.

How Much Is An Umbrella Policy

For about a $150 to $300 a year, you could get an additional $1 million in liability insurance. After the initial million, each million costs an extra $60-$75 on average. Just think how much a few hundred dollars could save you in the long run!

Finding The Best Umbrella Insurance For Your Assets

First, you need to consider your limit. Calculate your assets to determine if a $1 million or $2 million policy would be enough.

If your net worth is higher you may need a higher limit. Most insurance companies offer limits up to $2 million. You will need to work with your insurance agent to find an insurance company who provides higher limits.

You should also consider the loss of future income when determining your coverage amount. Liability lawsuits can cost settlement and legal fees along with current and future income if you are unable to work. An independent agency like Save-On Insurance Services can review the limits of your home and auto policies, then compare quotes with multiple insurance companies to find you the best options at the best available industry rate. Ultimately, your agent can help you make a more informed decision.

Choosing The Insurance Company

An agent will work with you to find the best insurance company. If you are looking for an umbrella policy of $5 million, you will need a financially secure insurance provider. Insurance companies are rated on financial strength by A.M. Best. A “B+” is a good rating, but may not be good enough for a $5 million policy.

An independent agent like Kevin Tavakali at Save-On Insurance Services can help you compare multiple companies to find the right fit for you and your situation. You can choose to bundle your umbrella policy with your home and auto or choose to purchase a standalone policy.

Contact Us Today

Insurance doesn’t have to be complicated. We are here to help you find the coverage you need to have the peace of mind you deserve. When you find yourself asking, who offers the best umbrella insurance options near me? The answer should seem obvious at this point.

Call Save-On Insurance today at 310-474-7283 to review your insurance needs.

We work with the top insurance companies that specialize in luxury home and auto policies. We will help you find the best umbrella insurance.