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  • Writer's pictureKami Jones, AU, AINS

What is Personal Umbrella Insurance and do I need it?

Updated: May 5, 2021

Do you ever worry that your auto and homeowner’s policy limits aren’t enough? What if you get into an accident and the auto limits can’t pay the whole amount required? Where does that extra money come from? Sadly, the additional costs can come from your personal assets like savings, retirement, and property and, in extreme cases, you could lose everything. Personal Umbrella Insurance is used so that you never find yourself in that nightmare.

Personal Umbrella Insurance adds an extra layer of protection above another insurance policy, such as homeowners or auto insurance. This extra layer of protection comes into play when your home or auto limits have been all used up and there is still more money needed to be paid. Without an umbrella policy, you would have to pay the extra money out of your own assets. With an umbrella policy, the policy would kick in and pay the extra costs thus protecting your assets.

For example, lets us assume that you get into an automobile accident that causes $1,000,000 in damages. Your current auto policy has limits of $300,000. The auto policy will pay $300,000 towards the

$1,000,000 but not more than $300,000. There still is a remaining $700,000 in damages that still needs to be paid. If you had an umbrella policy with limits of $1,000,000 then that policy would kick in and pay the remaining $700,000. However, if you didn't have a personal umbrella policy, you would be responsible to pay the $700,000 in damages. This money could come from your personal assets like your home, checking and savings accounts.

Additionally, personal umbrella insurance can also be extended to other people in your household, like your spouse and children. If your child gets into an accident and uses up all the auto limits, the umbrella m

ay kick in and provide additional coverage up to the umbrella limit. Most umbrella policy start at $1 million and go up in increments of millions ($1, $5, $10). Umbrella policies are not required but might help in the event of an unfortunate serious loss.

Whether or not you need a personal umbrella policy is your call. If you feel like you want the additional protection of having more limits available, maybe an umbrella policy is something you should have. It can help to alleviate additional worry that you are not fully covered. However, if you feel like you are covered enough under your home and auto policies, then maybe an umbrella policy isn't for you. Something else to consider is that you can always raise the limits on your home and auto policies to provide extra protection as well.

If you ever want someone to do a review of your insurance policies to see if adding a personal umbrella policy makes sense, feel free to reach out. We are here to help.


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