Tuesday, August 23, 2011

What is Umbrella Insurance ? Do I need that ?

Umbrella insurance is an TOP UP of an existing insurance. What and how an umbrella insurance protects you ? Umbrella insurance protects you if the claim amount is above the standard limits. Umbrella insurance and excess insurance is different. Excess insurance will come into effect when all the underlying policies are exhausted,but umbrella insurance will fill the excess of the claims of each underlying policies. The word it self specifies as it shields the existing insurance. All umbrella policy will come into picture when the claims allowed for the existing polices exceeds the limit of the policy. Umbrella insurance can be taken on any product such as Auto, Fire, Home owner, Recreational vehicle, Motor home, Yacht , Boat, off road vehicle, if the company provides the same.

A brief

An insured has an auto insurance policy with liability limit of $200000 and Home owner policy with liability limit of $500000 and Fire policy with liability limit of $800000 with an TWO MILLION umbrella insurance. So, in effect the insured limits are now for auto insurance policy with liability limit of $2200000 and Home owner policy with liability limit of $2500000 and Fire policy with liability limit of $2800000 .

Based on the insurance company the criteria/rules can change.

a) If a person has to take umbrella insurance for Auto , he should take for Home also.

b) Cannot take for Hurricane prone area

c) Depends of state also the law can change.