Insurance tips - Buy an umbrella liability policy to cover insurance gaps in your primary policies
All umbrella car or homeowners insurance policies cover lawsuits. Typically, these policies will provide a base layer of coverage, usually $300,000 or $500,000 per claim. Then, if you're sued for more than those limits, an umbrella policy will pay excess amounts up to the umbrella limit of $1 million or more.
The real advantage of an umbrella policy is that it will defend and pay some judgments against you from personal lawsuits not covered by your primary auto or homeowners policies.
Never worry about the price of an umbrella policy. Instead, focus on whether it is broad enough to cover those uncovered risks in your life not covered by auto or homeowners insurance.
Here are just a few examples of lawsuits not covered by auto or homeowners insurance that can be covered by the right umbrella policy:
- Damage to rental cars in the U.S. or abroad.
- Injuries you cause to a water skier while renting a powerboat on vacation.
- Liability that you agreed to in a contract such as a wedding reception contract, making you responsible for all injuries and/or property damage caused by wedding guests.
- Injuries you cause to a co-worker while driving a company-furnished car.