Umbrella Insurance 101: What Is It and How Does It Work?

Many people use umbrella insurance to extend coverage on existing business, home, or auto policies. It’s typically used to raise coverage limits in areas where the owner faces liability risks.
Here’s a closer look at what umbrella insurance is and how it helps provide financial protection.

How umbrella insurance works

Usually, standard home and auto plans have limits on liability coverage of $300,000 to $500,000. You can extend these limits up to $10 million with umbrella insurance. This coverage is useful if the liability limits of your standard policy are less than the value of your assets. People who need millions in coverage are those who own millions in assets. You might also consider this coverage if you own dogs, a swimming pool, or high-risk recreational equipment.

Personal umbrella insurance (PUP) starts at $1 million in coverage. The cap on coverage up to $10 million depends on the insurer and how the firm structures its policies. The cost of umbrella insurance also varies among providers, but it is typically $150 to $300 per year.

Instances covered by umbrella insurance

Umbrella insurance offers wider coverage than what a standard plan provides. Liabilities under this plan include libel, slander, and false arrest. It covers legal fees and losses associated with a lawsuit. It may also cover lawsuits accusing you of personal psychological harm and mental anguish. This coverage extends to instances when you travel overseas.

A good example of what umbrella covers is if your dog bites someone on your street. It may also cover the costs of accidents you cause or when a visitor slips and falls on your driveway. Another example is if you post something on social media that offends a third party who then sues you for libel. You can be sued for numerous reasons, even by your neighbors, so it’s best to be prepared with sufficient liability coverage.

What isn’t covered

Although umbrella insurance extends liability coverage, it does not cover your injuries or damage to your property. It also won’t cover any damage you intentionally cause to others. Nor will it cover any liability you take on by signing a contract. Some policies do not cover injuries caused by certain types of dogs. Therefore, it is best to ask your insurer any questions about coverage rather than assuming your policy covers everything you need.

Where to buy umbrella insurance

Not all insurance companies offer umbrella insurance, but you can still find plenty online. It takes time to research different insurance plans, and many people end up being sidetracked by rates. You should think about getting the best deal for the best coverage. At Pittman Insurance Group, we help clients understand their risks and coverage options.

Since the insurance industry is constantly evolving, it’s best to work with a firm that offers a collaborative relationship to help you navigate through its complexities. Umbrella plans can be for homeowners or businesses, but you must pay close attention to the details. Pittman Insurance Group helps you understand what your plan covers, so there aren’t surprises when you file a claim.

If you have a high net worth, you should consider umbrella insurance as a strategy to protect your valuable assets. Contact us at Pittman Insurance Group, LLC for more information about getting the right coverage for your home or auto insurance needs.

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