Personal Umbrella Insurance

Your Auto, Home, Motorcycle, and other policies with your primary insurance carriers have maximum limits or limits that you decided to purchase; however, in case of a claim, you might be liable for greater amounts than your primary insurance policy limits. That’s where Umbrella insurance kicks in. It will extend the coverage above your liability limits on your primary policy. Usually, Umbrella policies are sold in increments of 1 million dollars.

Here is an example of an Umbrella policy in action. You have an Auto insurance policy with a Bodily Injury Liability limit per person at $250,000 and a $1 million Umbrella. You were involved in an accident with another driver who was severely injured. The bodily Injury claim ended up being $800,000. In this case, your Auto insurance policy will pay $250,000 since this is the limit of Auto insurance liability you purchase. Umbrella will cover the rest of the claim within the limit listed on the Umbrella policy. So, Umbrella will pay $550,000 since it’s within its limit of 1 million dollars. If you didn’t have an Umbrella policy, you’d personally be responsible for $550,000, and your personal assets might be at risk.