Tuesday, February 15, 2011

When You've Exhausted the Limits of Liability Insurance

... take shelter under the expanse of an umbrella policy.

Very simply put, an umbrella policy does what its name implies—provide protection when your other insurances have been exhausted.

An umbrella policy is personal liability coverage that can be purchased only when you already have other insurance coverage. Think of it like a buffer, a cushion, that protects you when the limits of your individual policies have been exhausted.

Consider for example that you have homeowner's insurance that covers you up to a maximum of $500,000 in claims. You could purchase an umbrella policy that would extend this coverage to say $1 million, or an amount you decide. If there is a claim of $750,000 on your homeowner's insurance, $500,000 of the claim will be paid by your homeowner's insurance. For the remaining $250,000, the umbrella policy kicks in and pays the amount.

Umbrella policies are relatively inexpensive because a claim has to first be fulfilled by a primary policy before you start drawing from your umbrella. Premiums/costs of your umbrella policy will vary depending on the limit you set for your policy. Personal liability umbrellas for up to $1 million in coverage can cost between $150 and $300. Every additional $1 million in coverage incurs an added cost to your umbrella premium.

Umbrella pros:
- extension of liability coverage
- extendable coverage limits
- protection in the event of bodily injury, personal injury, or property damage
- wider protection if you are sued
- low annual costs

In order to purchase an umbrella policy, you need to have a base coverage of at least $150,000 to $250,000 for auto insurance and $250,000 to $300,000 for your homeowner's insurance. An umbrella policy does not cover you against business liabilities. Nor does an umbrella policy provide protection if you have caused damage or losses with ill intentions.

Talk to a trusted insurance agent or broker for more information on umbrella policies and to learn how they can protect you and your assets. For over half a century, Allied Brokers and their experienced agents have been helping clients assess and fulfill their insurance needs. Call (650) 328-1000to speak to an insurance specialist or visit www.alliedbrokers.com for more information.

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