A good majority of policyholders are familiar with umbrella insurance however if asked what it is they would not be able to provide an answer. This is primarily because many times umbrella insurance coverage does not come up when the insured is taking out his or her coverage. There is a great deal of benefit in purchasing an umbrella insurance policy and the following content provides information as to the definition of umbrella insurance and why it may be to your advantage to carry such a policy.

First when you attain liability coverage you are provided protection when a civil lawsuit is presented as a result of your own negligence such as reckless driving which is more often than not the reason a lawsuit is filed. Also liability protection is also pertinent if you are responsible for anything else with respect to an accident or injury on your property.

When you are protected from a liability standpoint the protection comes as part of your automotive policy. Anything that is your fault not covered by your auto policy will be part of your homeowner’s coverage. In example, a civil suit may be filed against you if your dog was to bite a visitor to your property. Rather than your having to deal with the complications of a lawsuit your coverage would take care of the monetary considerations with respect to the incident. Naturally, as with any policy there may be exceptions to the above scenario however you get the general idea. Your insurance professional will be able to assist in taking care of anything that your policy does not cover from a liability standpoint.

Your homeowner’s policy will cover up to five hundred thousand dollars with respect to liability coverage. The same may be said with respect to your car insurance coverage. There are some insurance companies that will extend liability coverage up to one million dollars; however if the total amount of assets you need to cover are above this number you will need to take the remaining amount out of your own pocket. The question then arises: Why pay the remaining out of pocket when all that is needed is to invest a few more dollars per month in an umbrella policy? Why didn’t the question come up earlier? Probably because the insured was not aware the umbrella policy was available. An umbrella policy will provide additional liability coverage of one million dollars and upwards in addition to what you now have provided for your home and automobile.

A good many policyholders may scratch their heads at this and exclaim that their assets do not total such an exorbitant amount: In such a case you do not need an umbrella policy and this may be part of the reason you weren’t able to define it in the first place—that is if you did not understand the basis of umbrella policies until now. After all, it is not necessary to be over-insured.

However if you believe an umbrella policy may be advantageous with respect to additional liability coverage you’ll want to include the following calculations when arriving at a total with respect to assets:

1. Twenty five percent of your total income within the household for the next decade;
2. Total investment portfolio and amounts in bank accounts; and,
3. The total equity within all of your property holdings or real estate.

Another benefit to you when purchasing umbrella insurance coverage is that such a policy will pay all your legal expenses when confronted with a civil lawsuit. Further if you own rental properties regardless of locale you may use your umbrella policy to cover your units. The expense is generally around ten to twenty dollars per unit rented per year; therefore it is worth the minimal expense. In order to use an umbrella policy to cover rental properties the title to the property should be in your name personally and not the name of a corporation or business.

The protection with respect to personal injury claims inside an umbrella policy provides to you as insured coverage that may not be part of your traditional home or car insurance policies. Areas covered include:

1. False arrest and (false) incarceration;
2. Prosecution that is hostile in nature; and
3. An eviction that is not warranted.

In other words, many common policies may provide adequate protection with respect to property damage or bodily injury however not for claims with regard to personal injury.

Additionally a personal umbrella insurance policy is a real bargain for the amount of coverage you receive. In example, a premium for a one million dollar umbrella policy is as reasonable as approximately twenty dollars per month itemized or around two hundred dollars per year. That said your premium with respect to an umbrella insurance policy will be dependent on the number of automobiles you own; the number of younger drivers within your household and amount of prior claims filed. Many insurers will not offer umbrella policies to an insured that is not by their definition considered a safe driver.

The umbrella policy may be purchased separately from other policies. Insurers however will expect you to purchase basic coverage first such as a homeowner’s policy. Also some insurers will not sell you an umbrella policy if you carry your basic liability insurance with another company.

The umbrella insurance policy once again is personal protection. The personal umbrella insurance policy will not cover claims of liability with respect to an existing business you may own. In order to be covered with regard to any business endeavor you will need to take out business insurance. Further an umbrella policy is not the same thing as excess liability insurance. Excess liability coverage takes care of items that are covered by an existing basic policy whereas umbrella protection is farther reaching in scope in that it covers such items as expense for litigation.

In summary, for the reasonable price, it you are not currently covered from a liability standpoint for total personal assets it may be reasonable to add a personal umbrella policy to the insurance coverage you now carry. The minimal amount may save you financially should you be sued particularly considering the fact we live in a society rife with lawsuits.