How It Works

• Essentially, umbrella coverage acts as a protective layer on top of your existing policy to guard against extensive loss with amounts surpassing the basic policy limit. If you carry a policy on your home of $500,000, this is the maximum amount that can be paid for damages stated in an approved claim. If a fire causes extensive damage to your home, and its contents, totaling $600,000, an umbrella policy has the added protection to cover the additional $100,000.
  
  

Benefits

• The benefits of umbrella coverage are not restricted to just one kind of policy. Umbrella coverage enhances a variety of policy types that include auto, home, and business. You will have peace of mind knowing the extra protection will pick up extended costs for bodily injury, damage to another person's property, or if a lawsuit is brought against you. In addition, many insurance carriers offer discounts for maintaining multiple policies.
  
  

How Much Is Enough

• Everyone's insurance needs are different. When determining how much umbrella protection you need, it is important to assess your current financial status. Knowing your income, the value of your business, investments, real estate, savings, home, cars and possessions is vital. You want to make sure the policy limits will provide you with the coverage you need without putting your finances in jeopardy.
  
  

Cost

• The cost of umbrella insurance is quite affordable. A policy limit of $1 million has premiums averaging up to $300 annually. Some elements that determine the final cost include deductibles, policy limits, insurance rating and location where the policy is issued. For a few hundred dollars you can have extra protection that will save you hundreds of thousands of dollars, or more, in the event you experience a loss.
  
  

Considerations

• The protection of an umbrella policy does not take the place of any standard policy. View it as an option for added protection depending on the health of your financial portfolio. Seeking the advice of an insurance or financial specialist is wise when making comparisons, and to get a better understanding of which policy may work best for you.