Preferred Financial Group

"We listen, we educate, then we perform like no one else in the industry."

Frequently Asked Questions

"What Is Umbrella Insurance?"

 

It is liability insurance that provides protection in excess of an insured’s primary homeowners and automobile insurance policy limits. Oftentimes, umbrella policies provide broader coverage than what is covered in typical homeowners and automobile policies. In cases like this, an umbrella policy acts as primary insurance for losses not covered by the other policies.

 

Things to consider:

    • A few examples of liabilities that might be covered under an umbrella policy that may not be covered in a homeowner’s policy are libel, slander, and invasion of privacy.
    • Typical Limits of Liability coverage range from $1,000,000 to $5,000,000, usually in million- dollar increments.
    • If you are in need of additional coverage, it is available as a separate Excess Umbrella Insurance policy…usually placed through a specialized insurance company.
    • Umbrella insurance is one of the best buys in the insurance industry. A $1,000,000 policy will normally have an annual premium of less than $200 and even less than that for each additional million.

 

Illustrated:

Rob and Marge have lived conservatively all their lives. Even after putting their children through college, they were still able to build a net worth of nearly $2,000,000. They felt like they were now living on Easy Street until one day, when they caused an auto accident that caused property damage and bodily injury, and resulted in a legal settlement of $1,000,000 to the injured parties. Their auto policy provided Bodily Injury Liability coverage of $500,000 and Property Damage Liability coverage of $100,000.  Here’s what happened: Their insurance company paid the limits of the policy totaling $600,000 and Rob and Marge were responsible for the balance of $400,000…putting a measurable dent in their net worth. With 20/20 hindsight, they could see how investing in a $1,000,000 umbrella policy would have preserved for them a considerable portion of their life savings.