Life itself is unpredictable. As we go through life, we are exposed to potential accidents, disasters and mishaps that can cause injury, property damage, or worse – and these incidents are unplanned and impossible to predict when or whether they may happen. Insurance is designed to help provide financial protection against such disasters, but not all policies provide the coverage needed for unusual circumstances. In these cases, umbrella insurance policies may be of benefit.
In this guide, we will discuss umbrella insurance policies in California and how they work, helping you to make informed decisions about these valuable policies and whether they may be right for your needs.
What is Umbrella Insurance?
In simple terms, an umbrella insurance policy is one designed to offer extra coverage on top of one’s automotive or homeowners insurance policy. This extra coverage centers on liability, particularly if the policyholder were to be sued by another party. The way the policy works is that it continues to provide liability coverage once the policy holder’s other insurance coverage limits are exhausted. Umbrella insurance is sometimes referred to as excess liability insurance.
Umbrella insurance policies provide an extra layer of financial security for those who may be at risk of lawsuits against them, such as suits for property damage or injuries caused to others in an accident or mishap. These specialized policies are often recommended for people with high-value assets or accumulated wealth and can be very beneficial if one is at risk of being sued by another party.
How Does Umbrella Insurance Work?
To gain a clear understanding of umbrella insurance and how it works, it can be valuable to look at an example. Imagine that an insured motorist was to cause an accident with another vehicle. In the accident, severe property damage to the cars involved and injuries to several people was experienced. The motorist causing the accident has automotive insurance, but the damage and injuries exceed the coverage limits of his or her policy. So, in this scenario, property damage to the vehicles exceeds $50,000, and medical care for the injured people is expected to exceed $200,000. What is the driver responsible for the accident going to do when his or her policy is exhausted?
An umbrella insurance policy can help. It helps the policyholder by creating an “umbrella” of additional liability coverage. With an umbrella policy in place, any additional liability costs will be covered that go beyond the limits of the car insurance.
Umbrella insurance policies vary in price and in coverage. There are many factors that may influence the annual premium of these supplemental policies. To learn more about California umbrella insurance, speak to an insurance agent today. The agent can help you determine whether such a policy is right for your specific needs, and can help you explore the many options available.