An Umbrella policy is a liability policy that protects your personal assets from a judgment. If you own a secondary property, rental property, or have over $250,000 in your investment portfolio, you should consider purchasing an Umbrella policy.
In most states, in order to purchase an Umbrella policy you must carry a minimum underlying Bodily Injury limit of $250,000 per person/$500,000 per accident and $100,000 in Property Damage on your auto, motorcycle, motor home, or recreational vehicle. On your Homeowners, Condo, Landlord and Boat policy, you must carry a minimum limit of $300,000 in Liability coverage. In order for an Umbrella policy to pay out, your primary policy’s limits must be exhausted. After the primary policy has been exhausted, the Umbrella policy would pick up coverage.
A good reason to carry an Umbrella policy would be the following; we had a client who had a stroke while driving his automobile. He hit five vehicles before his vehicle came to a stop. He caused over $150,000 in Property Damage and was sued for over $300,000 in Bodily Injury. He carried a 1 million dollar Umbrella policy, he owned over $1,000,000 in assets that could have been at risk. His automobile policy covered the first $250,000 in Bodily Injury and 100,000 in property damage. Once these limits were exhausted from his automobile policy, his Umbrella policy paid out $100,000, $50,000 on Bodily Injury and $50,000 property damage.
The limits offered for an Umbrella policy depend on how much money you have in assets to protect. You can purchase the limits starting at 1 million, some companies go all the way to 10 million dollars. Umbrella Insurance for 1 million dollars costs about 400 a year. A small price to pay to protect everything you have worked so hard for.