You may have heard of an umbrella policy when discussing insurance. However, many people are unaware of what it actually is and how to utilize it. Because of this, umbrella policies may not be purchased or even used. When it comes to personal injury cases, it’s important to know what your umbrella policy will cover. After all, there’s no sense in having the policy if it’s not going to be of some use to you down the road. Keep reading for the basics of personal injury coverage with an umbrella policy.
What Does an Umbrella Policy Cover?
An average umbrella policy is basically an add-on to the policies you already have. This means it covers above what your normal policy covers. Bodily injury, personal injury, property damage, and landlord liability is what an umbrella policy more commonly covers. Umbrella policies don’t cover things like business losses, written or oral contracts, personal belongings, etc.
How Does an Umbrella Policy Work?
As mentioned above, an umbrella policy kicks in when your normal policy isn’t enough. It acts as a band-aid of extra coverage just in case your usual policy isn’t enough. For example, if you were in a car accident that was your fault, and the other party was injured in the incident, your normal car insurance will cover up to a certain amount. However, if something happens and the case ends up calling for more than your car insurance will cover, the umbrella policy will begin covering the amount that went beyond the coverage of your normal car insurance.
Many people think having an umbrella policy isn’t worth it. However, here is a scenario to put it into perspective. Car insurance policies will only cover so much and you can’t purchase any more than their highest limit. Therefore, the only way to get extra coverage is to go for an umbrella policy. When personal injury cases are presented, aspects such as lost wages, grief, etc. are covered outside of the cost of medical bills for the injury itself. Say you hit a doctor and he sues you for lost wages on top of everything else. You could be looking at a million-dollar payout for damages with your car insurance only covering $500,000 of that. If your insurance doesn’t cover it, the judge and jury won’t care. You will still have to find a way to put the leftover damages amount. This can result in garnered wages, loss of property, home, other belongings, and more.
Umbrella policies aren’t necessary or required by law. However, they can prove to be quite the backup in such a sue-happy world. Umbrella policies commonly can be purchased in one million increments for up to five million in coverage.