This blog is meant to be a place to find honest information and discussions about insurance. There are many types of insurance that I’m a strong believer in, there are some that I rarely believe are useful or necessary and then there are other types which depend on circumstances or that I just don’t know much about. Today’s post is about one of those.
Umbrella Insurance, What Is It?
Umbrella insurance is the type of insurance that will protect you in nightmare scenarios that would lead you to bankruptcy. Such an insurance would be added to home insurance or car insurance for example for instances where the coverage that you have falls short. For example, suppose someone comes around your house and ends up making a bad fall and suing you for $2 million… who would do that? I guess it depends on where you are and who you know but it is something that happens more frequently these days, unfortunately.
Another example would be you or a one of your kids driving your car into a huge accident with millions in damages.. In most of these cases, the standard car or home policy would fall short. An umbrella policy is meant to provide that protection.
So yes, an umbrella policy is basically a policy to protect you against massive lawsuits.
More than almost any other insurance, the odds that you will end needing umbrella insurance are tiny.
How Much Does It Cost?
Of course, that can vary quite a bit depending on where you live, your car, risk factors, etc. I am told though that the cost is usually between $200-300 per year for $1M in additional coverage. That isn’t that much.
Where Does It End?
To me, this just seems a bit much. Potentially useful yes. But not enough fro me to shop at this point in my life. I do understand though that we all have different circumstances and a few years or even a few months from now, I could end up changing my mind on this one. But to me, it just seems like an extra protection that is so unlikely to help that it’s not worth it. Even if you did get it, for how much protection would buy? $1M? $2M? $5M? Or even more? Where does it end?
Where To Get Them?
I guess most brokers do offer this policy. I did see that Geico does, you can find out more about it here. Also, there is an interesting list of questions that you might get asked if you call regarding umbrella policy, it’s worth looking into before calling brokers.