Umbrella Insurance 

 Protecting consumers against the unexpected.

A strong personal financial plan often includes reserve funds for the occasional mishap, but some accidents are too costly to be covered by the average savings. That’s why many consumers choose to buy insurance policies. But does a typical homeowners or car insurance policy always provide enough coverage if an accident injures someone else or causes damage to their property?

Any number of incidents, such as a serious car crash, could lead to a gap in coverage, or no coverage at all. Having an umbrella policy can help close the coverage gap.

An umbrella policy provides added liability coverage beyond the limits of an auto, homeowners or renters policy. It helps protect consumers against the financial impact of accidents for which they are responsible that lead to damages exceeding the underlying policy’s maximum coverage.

Added protection for car insurance policies: If a driver is responsible for an auto accident, a car insurance policy pays for the damage to the other vehicle and any necessary medical expenses. However, if those costs surpass the insurance policy limits, the driver who caused the accident would have to pay the remaining amount out-of-pocket. An umbrella policy would help to cover this additional amount.

Homeowners also benefit: Hosting family, friends and neighbors for holidays, barbeques and birthday celebrations are the events that make lasting memories, and are part of what makes a house a home.

Unfortunately, opening your home to guests can potentially lead to a lawsuit if someone gets injured on your property. Accidents in the home may result in serious injuries to visitors and significant liability claims against the homeowner. While a homeowners policy would generally respond to these claims, an umbrella policy provides coverage beyond the limits of the homeowners policy. This additional coverage can help guard against the financial risks associated with owning a home, and provide consumers with peace of mind.

Is an umbrella policy expensive?: Umbrella policies are more affordable than you might think. According to the Insurance Information Institute, a $1 million personal umbrella policy typically costs around $150 to $300 per year. The next $1 million of coverage will add about $75 to the cost, and every million after that will be approximately $50. The price of the policy will vary based on the insurer’s rates, a person’s specific liability exposures and the coverage limit chosen.

Financial planners recognize that an umbrella policy offers additional protection for your assets, and often list it as one of the first suggestions their clients should consider.

Now may be a good time to review your liability exposures and decide if an umbrella policy is a good choice to supplement your financial plans.

About the Author: Scott Markulec is an assistant vice president at NJM Insurance Group, one of New Jersey’s leading writers of personal auto, homeowners and umbrella insurance. NJM is also the largest provider of workers’ compensation insurance in the Garden State and a top insurer for commercial auto coverage.


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