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Standard insurance policies have financial limits when it comes to certain risks. A car crash and medical bills could add up to $1 million, but your auto insurance coverage may only be up to $300,000. Fortunately, an umbrella liability insurance policy can help when your claim could be more than the limits in your policy.
Umbrella insurance is an add-on policy that covers the costs over the limits of other insurance policies. It covers attorney’s fees, damages, and settlements and judgments against you. For example, if you’re sued for $1 million after a car accident and your policy has a maximum liability of $500,000, umbrella insurance can help pay the other $500,000.
These policies don’t replace other kinds of coverage, but rather extend that coverage to provide more protection from high-cost events. If you have liability limits of $300,000 on your homeowners policy, for instance, purchasing a $1 million umbrella policy raises your limit to $1.3 million. Umbrella policies are generally purchased in coverage increments of $1 million, and a $1 million policy is typically the minimum amount of coverage you can buy.
To figure out if you need an umbrella policy, assess how likely it is that you could be held financially responsible for accidental injury to another person or their property. You may want to consider an umbrella policy if:
Life is full of surprises. But taking the time to make sure you, your family, and your assets are adequately protected will help decrease the financial impact of life’s unexpected events.
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Please review your insurance policies carefully as coverage and exclusions vary.