3 Commonly Asked Questions about Umbrella Insurance

Every day you are exposed to different types of risks, some of which may be covered by your insurance, while others are not. However, what happens when the risk is higher than your insurance limit? In such a situation, chances are that you would lose most if not all of your savings.

Umbrella insurance is a type of personal liability insurance that covers risks that are too high or above the limit of a typical insurance policy. A good example of such risk is a lawsuit that is larger than all your premiums put together. Here are three commonly asked questions about umbrella insurance.

1. How Does Umbrella Insurance Work?

First, you need to buy the policy; then, you must pay your premiums at regular, predetermined intervals. Although it is a personal liability insurance, an umbrella policy can also cover other people directly related to you, like your family members. It covers lawsuits, claims of libel, false imprisonment, privacy invasion, malicious persecution, forceful entry, and other high-risk liabilities. For instance, if your kid gets into a fight at school and causes bodily injury to the other party, this insurance provides coverage from the resulting lawsuit, if there is any.

2. How Much Does Umbrella Insurance Cost?

There is no fixed cost for umbrella insurance.  Instead, it depends on factors such as:

  • The state you live in
  • The amount of coverage you need
  • The risks attached to insuring you
  • The kind of property you own
  • The number of people you want your insurance to cover

3. What Will Umbrella Insurance Not Cover?

Although this policy has a higher limit and covers what the other insurance policies cannot cover, it still has limits.

Umbrella insurance will not cover:

1. Damage to your property

Just like standard liability insurance policies, umbrella insurance will not cover damage to your property. It only covers damage done to other people, provided you are liable for the damage. For coverage of your property, you need other kinds of insurance (non-liability coverage).

2. Damage caused on purpose

Umbrella insurance will not provide coverage for a malicious or criminal act. Instead, you may even lose your coverage for such acts.

3. Contracted liability

Once you consent to assume liability under a signed contract, your insurer will not cover any potential damage. Instead, you will have to pay out-of-pocket to cover such expenses. Therefore, before signing contracts or documents involving risks, it is advisable to contact your insurer to know what is or is not covered by your policy.

At VGW Insurance, we offer specialized insurance coverage to protect you beyond the limits of your standard policy. Contact us today to get a quote online!

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