An umbrella insurance policy covers a wider range of incidents than other types of liability insurance, and can be used to extend the value of your home or car liability coverage above what is provided in the basic policies respectively. It is easy to explain how an umbrella liability policy works, and equally easy to see how having such a policy can be a benefit.
Most states require you to carry both bodily injury and property damage liability coverage. These are usually packaged together in your car insurance policy, but the required minimums may not be suitable if you are found to be at fault in an accident which involves severe damage or serious injuries. If you have an umbrella policy, your car insurance will pay for the liabilities up to the listed limits, and then you umbrella policy will cover any costs over that– up to the full limit of the umbrella policy. But the umbrella policy goes even farther.
Umbrella coverage can also be used for home insurance liability claims, and will go into effect, just as with your auto insurance, where the regular homeownerâ€™s policy reaches the liability limits. Umbrella policies are so named because they can be used for multiple types of liability, across different kinds insurance. So if you use the umbrella policy for an auto accident and then are faced with a large liability claim in your home insurance, the umbrella policy will pay for both instances, up to the full value of the policy.
When shopping for insurance online, look for companies that can provide you with an umbrella liability policy in addition to your car and home insurance. The reason it is better to purchase all of your policies with a single insurance company is because most companies offer a discount on your premiums when you have multiple policies with them. In that light, you can have an umbrella policy to keep your personal finances safer and save money on your insurance needs at the same time.