Umbrella Insurance: A Definition in Relation to Auto Coverage

A simple umbrella insurance definition is that it is insurance coverage that can protect you if your first policy gets maxed out. Umbrella policies are never your primary insurance policy. They are there in case the claim is larger than your first policy; in essence, to cover it. Umbrella policies are quite standard and uniform whether they are for cars, homes, or any other insurable items. They normally start at $1,000,000 of coverage and go up to $5,000,000. Umbrella insurance coverage sounds like it would be pricey due to the massive amount it can protect you against. However, it is extremely affordable and definitely something that every motorist should consider having. The yearly premiums for such coverage is normally under five hundred dollars, and for a million dollars in coverage, that is pretty good.

Why You Need It

To illustrate why umbrella policies are useful, lets create an example that happens every day. You are driving along and you are switching the song on your iPod when suddenly it falls to the ground. Of course having to pick it up, you wait until what you think is a safe time to do it; taking your eyes off the road. As this happens, you run a red light and create a seven car accident involving a few pedestrians. You are at fault for a huge accident. You have insurance for your car, but that is all that it will cover. In the end, you get sued for car damages and medical bills of those involved and the total lawsuit is for 3.2 million dollars. If you have an umbrella policy, all you would need to do is pay your deductible and the rest of the lawsuit would be paid for by your insurance company. In the end, it is better to have it than to not have it. Paying five hundred a year is better than paying a lump sum of hundreds of thousands of dollars.