What Is Umbrella Insurance?

If you’ve ever heard of umbrella insurance, you might associate it with wealthy individuals. That’s because it’s a type of liability insurance that provides additional protection for your assets as well as other losses that may not be covered by your other policies. But umbrella insurance is not something reserved only for rich people. You might not think that you have a lot of valuable assets, but if you own a car or a home, you do have assets that may need protecting.

Umbrella insurance takes over where your car insurance or homeowner’s insurance does not cover you. It does not replace your car or homeowner’s insurance. Rather, it’s purchased in addition to those policies to fill in the gaps. Your car insurance only covers up to a certain amount. If you’re involved in a bad accident, damages could certainly exceed that amount. That’s where umbrella insurance takes over.

Why would you need umbrella insurance? For one thing, it could prove to be very useful if you are ever involved in a lawsuit. You might think that it’s unlikely that anyone will ever sue you, but it happens more often than you think. Simply being involved in a car accident could result in a costly lawsuit. If you are ordered to pay damages to another person in excess of what your current policies will pay, your assets could be at risk. Umbrella insurance is also important if, for instance, you have your own business.

Like most insurance coverage, you hope that you’ll never need to use your umbrella insurance, but for a relatively low yearly cost, it does provide a lot of additional coverage as well as some peace of mind. If you want to learn more about the benefits of umbrella insurance, be sure to ask your agent. It might make sense for you.