The word umbrella has a lot of associations. And this is the rare case when all associations are positive and even soothing. And in your thoughts immediately something compact and non-burdensome arises that easily fits in a pocket, bag, or glove compartment of a car. Something that in heavy rain in a second will not only provide you with protection but also create a cozy island of security and tranquility amid uncontrolled elements.
Such a small thing that we don’t even think about usually. Such a little thing can change it all so much.
And there is no coincidence that the product that we will talk about today is also called an Umbrella. All because the principle of action is similar. But, here, the threats that he prevents are much more severe. After all, if you get in the rain, the worst can happen - your moist suit, in the very worst-case - it can provoke flu. But, some events can break your whole life and divide your world into “before” and “after.” And today, we will talk about protection against such disasters.
What is Umbrella Insurance
Let's visualize a terrible situation that can happen to each of us. So, you drive in the evening after a hard day, tired and upset. You just received an unpleasant call or heard on the radio about losing your favorite team. Thinking deeply, you go to the intersection at the red light of the traffic light. And you have an accident.
Unpleasant incident. But, you are a law-abiding citizen, you have proper insurance and a safe car. Like the person, you entered.
The insurance payout of your policy is $ 250,000. That is more than enough to cover all the damage incurred during the incident. Are things good? Maybe.
But what if the driver of the car you encountered is the local football team star. Or any other highly paid specialist. And as a result of the accident, he was unable to work for a month or six months. And you get a lawsuit, where only the compensation of official wages will be $ 1 million. Simple mathematical manipulations make it clear that you will be left alone with the legal requirements of the victim, while your insurance will be exhausted.
Such a nuisance may well knock you out of the saddle for a long time, or it may ruin your life.
It is for such cases that umbrella insurance exists. Your defense in case of an emergency when even a well-thought-out and high-quality policy is not able to solve the problem. Protection that goes beyond the limits and can pull you out of quicksand.
What does umbrella insurance cover
The above example, of course, is unlikely, but very revealing. We can talk for a long time with practical examples and come up with new ones to show the full breadth of the possibilities of umbrella insurance. It covers not only the events that happened to you but also with members of your family. Even if your dog pounces on a passerby or your son gets involved in a fight at school, this type of insurance can cover all these incidents.
The main characteristic attribute of umbrella insurance is that it compensates for any incident that the policy does not previously exclude. That is, unlike standard insurance schemes that specify insurance cases, umbrella insurance does not try to forge you intentionally. But do not take this as a golden ticket - there are cases when this policy does not compensate for money.
That is a liability policy. Therefore it covers the case when you are liable for damage to another's property. Thus, the availability of such insurance does not cancel the insurance of a home or a car.
It is only natural that damage done by you or your family members intentionally is also not refundable. Interpretation of various incidents is not always unambiguous, but be prepared that if you harm intentionally, you will have to pay personally, as well as bear legal responsibility.
And, remember that umbrella insurance and business liability insurance are not the same things. These are entirely different spheres of life, with their specific risks and features. Therefore, do not try to cover business risks with another policy. Also, keep in mind that if you accept the risk under the contract, then compensation cannot be carried out either - you realized the degree of your responsibility by putting a signature.
Responsibility related to war and armed conflict. Also not subject to coverage. Neither this policy nor other standard policies. That is the harsh truth of life. Insurance companies would have gone bankrupt long ago if they had covered such damage.
Personal umbrella policy
Surely you will agree that such a policy is an excellent option to sleep peacefully. And, for sure, everyone wants to have such a plan B. And this is true, but there is one caveat. Everything costs money, and umbrella insurance is no exception. Therefore, let's see if you need it and whether your investments will be justified.
If you listen to insurance agents, then the more policies you issue, the better. If you watch the news or read on the Internet about a variety of lawsuits - then the hand itself will reach for the phone to urgently arrange for umbrella insurance.
But the truth is that the only objective indicator of the need for such a policy is the risk of harm. That is personal risk factors. Typically, these factors include ownership of the property, renting it out, hiring domestic staff, a trampoline or swimming pool, and parties. And also if you can be considered a celebrity.
It will not hurt to get an umbrella policy if your family has a teenage driver or a dog. No matter how strange it may sound, but your child at the wheel and the dog can lead to massive, unpredictable damage.
Therefore, the decision, of course, is yours. But, in any case, the universal advice may sound like this: if you can afford such extended insurance - do not hesitate to arrange it.
What does umbrella insurance cost
And now, we turn to the main issue, which can become a decisive factor in determining the need for insurance specifically for you—the price.
And the price is exceptionally individual. First of all, it depends on the state rate, which, in turn, is calculated based on many indicators. Your personal history, property belonging to you, the number of family members, and the risks that may arise in the process of cooperation with you. Naturally, the more cars and real estate you own, the higher the rate. The more property, the higher the potential payout.
But, in the ratio of monthly payments and insurance coverage, umbrella insurance has no competitors. According to the Insurance Information Institute, the vast majority of cash in the amount of damage of $ 1 million cost customers $ 150-300 in annual fees. Add to the payment of $ 75, and the size of potential payments will rise to 2 million. Plus $ 50 for every possible million refunds. That is, it is so beneficial that the question arises whether it is legal at all. And do not forget that even if everything is fine and you did not turn to these payouts, then the conditional $ 300 was not wasted. After all, you bought your peace of mind.
The cheapness of the policy can turn your head only at first glance. Do not forget that to get umbrella insurance, and you must have a very impressive auto and real estate insurance. And, in most cases, these policies should be maximized.
If these conditions are not met, then the prices for umbrella insurance will be much higher and will significantly affect your budgets.
How to save on umbrella insurance
Umbrella insurance is not for everyone. Instead, not everyone can satisfy the requirements under which it becomes cheap. But it's not a problem. You can purchase endorsements to your auto or homeowners' insurance that increases your liability limits. That will not be a full-fledged umbrella, but in terms of functions, it will solve your problem.
A great option is bundles - insurance of all property in one company. In addition to saving on standard policies, you will undoubtedly be offered either full umbrella insurance at a discount or an alternative extension of the possibilities of your policies. And it's superfluous to say that dealing with one company is simpler and more convenient.
And in general, dealing with one company that meets all your needs is a great idea. But, finding such people takes a lot of time and effort. And the best way for this is to listen to the practice of friends and relatives and carefully study the reviews on the Internet.
Life is full of unexpected events. If you doubt - expect the unexpected. And it's supreme happiness that the market gives us not only opportunities but also their diversity.