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What is Umbrella Coverage and How Does it Protect Me?

The purpose of insurance is intended to protect individuals or businesses for a variety of reasons such as house fires, car accidents, lawsuits against companies, and many more. But what happens when your insurance is not enough to cover all of the costs associated with the claim? Many people ask the question, “what is umbrella coverage?” As Aaron Crane, an experienced personal injury and Phoenix car accident attorney, explains umbrella coverage is the added protection you may need if faced with an unfavorable situation or dramatic tragedy.

What is Umbrella Coverage?

If you have valuable assets to protect, it would be wise to invest in an umbrella liability policy. Umbrella coverage comes into play if you reach the limit of your liability insurance coverage on either your home or auto policy. It protects you beyond what your insurance policy is able to provide in the case of unforeseeable events that could strip you of everything you have. Many umbrella policies provide coverage of up to $1 million, although larger policy limits are available. Additionally, umbrella coverage protects you from numerous situations where general liability coverage falls through the cracks including libel and slander.

What Does Umbrella Coverage Protect you Against?

Umbrella coverage policies will protect you from a variety of circumstances, many beyond what your typical auto or homeowner’s insurance would cover. Claims for injury, property damage, personal liability, and other specific lawsuits fall under this protection. A main benefit of umbrella coverage is the protection it provides in the event of lawsuits that are not typical. As stated previously, umbrella insurance policies can protect you if you are sued for slander and libel. Furthermore, if you fall victim to malicious prosecution or false arrest your coverage could completely alter your life for the better. Broken down, here are some examples of the types of coverages that an umbrella policy would provide.

Bodily Injury Liability – This could cover the cost of medical bills or claims as the result of damages to another person’s body.

  • Injuries to others due to an at-fault auto accident.
  • Injuries caused by your dog.
  • Injuries to a guest in your home.
  • Injuries sustained to others while on your property.

 

Property Damage Liability – This could cover the costs associated with damage or loss to an individual’s property.

  • Damage to vehicles and other property due to an at-fault auto accident.
  • Damage to another individual’s property caused by your pet.
  • Damage to school property cause accidentally by your child.

 

Landlord Rental Unit Protection – This could cover costs associated with issues you may face as a landlord.

  • Injuries occurring on the inside or outside of your rental property.
  • Injuries occurring from your tenant’s pet biting someone.

 

How Does Umbrella Coverage Work?

The easiest way to explain how umbrella coverage works is through examining potential scenarios. For example, let’s say you are in a motorcycle accident and it is determined that you are at fault. The other driver sustained severe injuries and is hospitalized for an extended period of time. Although your automobile insurance has a high limit of $250,000, the driver’s medical expenses will cost beyond what your insurance provides. If you cannot afford to pay the additional expenses out of pocket, you may be subject to a lawsuit, putting your assets at stake. This is where having an umbrella insurance policy would come into play through protecting your bank accounts, home, and personal property through paying the remaining monetary amount that your auto insurance did not cover.

The Ultimate Coverage

The highest level of protection that an umbrella policy provides is through obtaining one that covers uninsured motorist claims. These policies will typically cost around an additional $200 annually, but the benefits far outweigh the costs. If you or a member of your family are catastrophically injured in an accident caused by an uninsured motorist, the umbrella coverage will cover all of the expenses incurred. It isn’t uncommon for major medical bills to exceed $1 million, so you want to ensure that you and your family is covered in the event that your current insurance policy wouldn’t pay for all costs associated with the accident. If any of these scenarios could potentially apply to you, consider shopping for umbrella coverage.

 

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