What Is Umbrella Insurance and Do I need It?
When it comes to the “need” for insurance, the issue can be a subjective matter, as some people’s idea of “necessary” may differ from another person’s view. While there are certain types of insurance products that you must have as a condition of the right to drive a vehicle, or to borrow money to purchase a home, in most cases, the actual need for insurance is an individual decision.
Umbrella insurance provides coverage that will protect the policyholder from financial risks associated with claims for negligence. For example, if the policy holder is negligent and causes bodily injury or property damage to another person, that is covered under the liability section of most policies. An umbrella policy supplements this coverage by providing an additional layer of coverage.
Auto accidents are fairly common, and many auto insurance policies have relatively low liability limits in order to keep premiums lower. An umbrella policy would provide additional coverage that would supplement your auto insurance limits, and it will also supplement the limits on the liability section of your homeowner’s policy.
An additional benefit that is offered by an umbrella policy is coverage for personal and advertising injury. This will protect you if someone makes a claim for libel, slander or defamation.
Considering the additional protection that an umbrella insurance policy provides, it is still important to analyze whether such a policy is actually necessary. In order to make this determination, it is important to weigh the your total assets against the risk of a claim that could affect those assets.
The best plan when considering an umbrella insurance policy is to consult an insurance professional who can explain the benefits afforded by such a policy, but it is also important to take stock of your own financial situation. Those who maintain a large amount of wealth and assets need to consider the risks of claims that could deplete those assets.