Umbrella insurance is one of the most unique types of coverage, and is essential for many different types of property. Essentially, this type of coverage protects you in the event that the damage you cause is more than what your current insurance policy is set to pay out.
For example, if your property damage insurance on your vehicle has a limit of $15,000 and you get into an accident that causes $20,000 in damage, umbrella insurance keeps you from having to pay that extra $5,000 out of pocket. It hovers (like an umbrella) over your existing policy to cover any deficiencies in your coverage.
Many people mistakenly believe that umbrella insurance is only for the rich, but according to MSN Money this is not the case. There are plenty of affordable options in the insurance industry, and there are ways to save money will still maintaining coverage.
For one thing, it is a good idea to purchase umbrella insurance coverage in a product bundle. In other words, buy home, auto and umbrella insurance from the same company, which will result in a package discount if you choose the right carrier. Insurance companies reward customers who use them for multiple policies.
You can also increase your deductible on your insurance policies, which will lower your overall premium. This means paying more out of pocket in the event of an accident or problem, but you won’t have to worry about coming up with $1 million if you are sued.
Generally speaking, umbrella insurance coverage is offered in million-dollar increments from $1 million to $5 million. If you want to keep your extra costs down, choose the $1 million option. Of course, this will limit your protection, but it is important to weigh the immediate savings against the possibility of being sued for more than $1 million.
And finally, you should be able to show your insurance company that you are a good driver with very few claims. Just like any other product, umbrella insurance costs are determined by a number of factors, including your risk of costing the insurance company money. If you don’t have any accidents or claims, you will be seen as a lower risk and therefore worthy of a lower premium.
Getting a good rate on umbrella insurance is not difficult, and it will provide you with a sense of security that can make driving a car or owning a home much less terrifying.