5 Umbrella Insurance FAQs

By theadmin

What kind of umbrella do you have? The long and skinny kind with the crooked wooden handle? Or the portable kind that tucks away inside your briefcase?

How about the kind that protects you and your family’s finances? We’re talking about umbrella insurance. It’s a policy that can protect your assets from justified or unjustified lawsuits.

Just as you wouldn’t walk out into the rain without an umbrella, you shouldn’t go through life without this kind of coverage.

Here’s a look at this oft-misunderstood insurance that promises peace of mind.

1. What is umbrella insurance?

This coverage protects your assets above and beyond the liability limits of your typical homeowners or auto policy. The Insurance Information Institute calls it “an extra layer of protection.”

2. Who’s a good candidate for it?

In the past, umbrella insurance had a reputation as something only those with significant assets needed — like ranches, upscale homes, and pricey cars — explains Texas Farm Bureau Insurance Agent Nathan Aviles in Jefferson county. People thought of it as protection from lawsuits that could wipe out fortunes and alter lavish lifestyles, he explains.

But in today’s litigation-happy society, more and more people may find themselves exposed to high-dollar lawsuits. Lawsuits — frivolous or legitimate — could result in millions of dollars in damages that impact the savings and futures of even those with moderate incomes.

That’s why Aviles defines a good candidate for umbrella coverage this way: “Somebody who basically owns a home and [vehicle] and has money in the bank … The more you have, the more you want to protect.”

3. What does it cost?

Aviles estimates a $1 million umbrella policy would cost approximately $300 per year. “For the protection it provides based on the cost of the premium, it’s well worth the price,” he says.

4. What does it offer?

Additional liability coverage — above and beyond your average homeowners or auto policy’s coverage limits. Not to mention peace of mind.

Aviles shares examples of dog bites that turn deadly or of teen drivers that cause devastating injuries. You could be found responsible for such accidents, and damages can skyrocket. “You just never know,” he says.

A few years ago, a report by ACE Private Risk Service showed this startling reality: Liability coverage in home and auto policies rarely exceeds $500,000, yet 13 percent of personal injury liability awards and settlements are $1 million or more, according to data from Jury Verdict Research.

“At the end of the day, umbrella insurance can really help you” Aviles says.

5. How much coverage do I need?

Call your Texas Farm Bureau Insurance Agent to Discuss your areas of risk, and get details that can help you determine if an umbrella policy is right for you.