UMBRELLA INSURANCE

Read the WARNING! first.

A good method of asset protection is “umbrella insurance” for homeowners, drivers and others.  No, we are not talking about insurance to protect your umbrella.  An umbrella insurance policy is a special type of insurance policy which provides “excess coverage.”  It provides insurance coverage above and beyond the coverage provided by certain other types of polices, providing additional limits of liability in a cost effective fashion.  Not everyone is eligible for an umbrella policy, but most homeowners, renters, drivers and small business owners should seriously consider buying one.

Typically, a family will have an insurance policy which provides insurance coverage for their home.  Homeowners are likely to have a separate insurance policy covering their automobile.  The homeowner’s policy usually covers things like theft, fire or other casualty to the home, and claims against the homeowner for negligence relating to use of the home.  For example, if you are doing some gardening and dig a hole which you forget to fill in, and the mailman breaks an ankle stepping into the hole because you failed to warn him/her about the danger, your homeowner’s policy is likely to provide coverage for the mailman’s claim against you.

The automobile policy covers liability arising from driving the vehicle, and may cover things like theft from the vehicle or damage to the vehicle caused by others.  The typical homeowner’s policy will not cover losses arising from driving a vehicle, nor will the typical automobile policy cover losses arising from use of the home.

Insurance policies have limits, which is the maximum amount of money which the insurance company will pay on a claim.  The typical homeowner’s policy has limits in the range of a few hundred thousand dollars.  Similarly, the automobile policy has limits which may range from a few thousand dollars to a few hundred thousand dollars.

An umbrella policy picks up where the primary insurance policy stops.  For example, if the limits of your homeowner’s policy are two hundred thousand dollars ($200,000.00), a million dollar umbrella policy provides coverage for losses above two hundred thousand dollars ($200,000.00) and up to the million dollar limit.  Some insurance companies will issue two million dollar umbrella policies.

One fundamental difference among many umbrella insurance companies is whether they will issue a “stand-alone” umbrella policy or whether they will only issue an umbrella policy when it is issued above their own primary insurance policy.  What this means is that some insurance companies only issue umbrella policies if they are also the insurance company for the primary insurance policy.  For example, the insurance company may not issue an umbrella policy to you unless it also provides your homeowner’s policy and your automobile policy.

The cost of an umbrella policy is usually relatively inexpensive for the amount of coverage provided.  We have seen million dollar umbrella policies which cost less than two hundred dollars ($200.00) per year.  To get an umbrella policy, contact your insurance agent.  Find out what you need to do to obtain an umbrella policy. An umbrella insurance policy may turn out to be one of the best investments you make.

f you need assistance with an Arizona umbrella insurance policy or asset protection, contact us at 928/445-3230.