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Umbrella Insurance

What is an Umbrella Insurance Policy?

Umbrella InsuranceAn Umbrella insurance policy provides a form of liability insurance that will supplement the liability provided on your other insurance policies such as your auto, home or renters policies. An umbrella liability policy covers a much higher limit and goes above and beyond claims directly relating to your home and auto.

The main purpose of your umbrella policy is to protect your assets from an unforeseen event, such as a tragic accident in which you are held responsible for damages or bodily injuries. If another party takes legal action against you, your umbrella coverage will pay for the damages you’re legally responsible for up to the policy limit.

What Does Umbrella Insurance Cover?

A personal umbrella insurance policy provides additional protection by increasing coverage for liability in two ways:

  • 1. Increases the dollar limit of liability coverage for primary policies
Example: Assume the coverage limit on the liability portion of your auto insurance totals $300,000. If you purchase an umbrella policy of $1 million, and you cause an accident that exceeds the $300,000 limit on your auto policy, your umbrella insurance can cover the remainder, up to $1 million dollars (a total of $1.3 million total liability coverage, in this case).
  • 2. Covers claims excluded by primary policies
Example: Typical liability policies may not cover damage claims resulting from false arrest, libel, slander, or defamation of character. If you are held liable for damages caused by these types of claims, the umbrella policy can help you cover costs.

The $300,000 liability limit in the prior example may seem like a lot of coverage, but can easily be exceeded in serious accidents.

Umbrella Liability Claim Examples:
  • Accident: Despite your careful driving and best intentions, you cause a serious accident. Your umbrella policy kicks in when the damages exceed the liability coverage limit on your auto policy.
  • Dog Bites: Your dog escapes the yard and attacks a neighbor, resulting in extensive medical costs. The umbrella policy covers the excess costs of hospitalization, care and rehabilitation after your homeowners liability coverage is used up.
  • Trampoline: Your son’s friends are playing on the trampoline in your yard and one of the boys flies off, suffering a spinal cord injury. Your umbrella liability manages the excess costs after you exceed the limits on your homeowners or renters liability policy.

You hope these situations never occur, but statistically they sometimes do. You can limit the financial consequences with an umbrella insurance policy.

Do You Need Umbrella Coverage?

You may want to give special consideration to an investment in umbrella insurance if the following pertain to you:
  • You own a pool or trampoline or ride a powerful motorcycle. Statistics indicate that these activities and others are more likely to lead to expensive liability claims.
  • You have assets at risk, including retirement savings, business income, college funds, and other assets with total values that exceed the liability maximum on your home or auto policy.

One of the best reasons to own an umbrella policy is the attractive price for peace of mind. The premium you pay for the high limits of coverage tends to be low. In other words, relative to the protection provided, umbrella insurance can be a great deal.

Call Hughes Insurance Services of Alabama today for your free no obligation umbrella insurance quote.

Hughes Insurance Services Of Alabama

Contact Us:

400 Century Park South
Suite 106
Birmingham, Alabama 35226
(205) 822-6778
(205) 417-1444

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