The excess or policy limits are usually quite large, ranging from one million dollars up. The insurer requires that the insured carry a full Comprehensive General Liability Policy with relatively high limits. These required limits are typically $100,000 or $300,000. In case of loss, the basic contract will pay first and when it is exhausted, the umbrella will pay the next million or up to its particular limits. The reasons for this requirement are that the umbrella insurer has the benefits of the basic insurer’s underwriting and loss prevention activities.

For the benefits you get, umbrella policies are the best buy in insurance today. These relatively cheap policies raise your liability coverage to a million dollars or more, and are available as additions to your auto or homeowners policies. Liability insurance protects you from paying a high legal award that might be assessed against you by a jury. For example, if you have injured someone in an auto accident and you are found negligent in a court of law, the jury could award a judgement against you of hundreds of thousands of dollars. Liability insurance makes that payment the insurance company’s responsibility.

Suppose that you have auto insurance of 100/300/50, which is quite common today. That means that if you are sued and must pay as the result of an auto accident, the insurance company will only pay up to $300,000 for bodily injuries to two or more people. However, with juries routinely awarding much more than that to accident victims, many people - especially those with a higher coverages to insulate them from the possibility of a high jury award.

The umbrella policy does just that. For an additional $100 or so annually, you can be protected up to $1,000,000 or more for liability. There are umbrella policies available that offer protection up to $5,000,000 for those who really think they need it.

Before you buy umbrella coverage, most companies require that you have either $100,000 worth of liability coverage on your home or $300,000 worth of liability protection on your car. In most situations, $100 or so will buy you $1,000,000 worth of coverage.

An umbrella policy increases your liability coverage. It is not necessary to buy an umbrella that covers auto liability and another that covers your homeowners. It’s all combined in one policy.

Even though you can probably buy an umbrella policy from either your auto or homeowner’s insurer at a discount, you may get even a better deal elsewhere on an umbrella. Shop around for the best umbrella coverage you can find.

Umbrella policies then, provide a cushion against large negligence awards that could wipe you out financially. The same company that sells you your homeowners or auto policy will probably also offer umbrella coverage. If you purchase your auto and homeowners policies from the same company, you may be able to buy an umbrella policy that will cover both at a discount.

Please note that the precise coverage afforded is subject to the terms, conditions, and exclusions of the policy as issued. This explanation is intended only as a guideline. This information is not intended to be considered investment, tax or legal advice. It is provided, for your education only. This is not an insurance contract. All terms and coverages are defined solely by your policy.

For more details, please call a PaulBalep representative toll-free 1-800-964-8614 to receive a free, no-obligation quote. Like so many satisfied clients, we think you’ll be happy you did. And to set up a meeting to discuss additional insurance and financial goals: Visit us online at www.paulbalep.com, or e-mail us at info@paulbalep.com.

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