What It Is And What It Isn’t
First, what it is. It is a liability only policy that adds a high amount of additional liability coverage to the personal auto and home policies. In most cases it adds $1,000,000 or more of additional liability protection over the personal auto and personal liability (home) policies. These catastrophe liability policies are very economically priced, yet offer tremendously high limits of coverage. A person who owns one house and two autos can purchase a one million umbrella policy for as little as $120 per year. That means for $120 per year a person has added an extra $1,000,000 of liability protection over their personal liability and auto liability coverage. There are a few important items to note. Some companies require that they also insure the home and autos that go “underneath” the umbrella. Some companies require customers to increase their current liability limits before they can add the umbrella policy.
Most companies do not include un-insured motorists bodily injury with the umbrella coverage and charge extra to add this coverage.
Check with your agent about these things.
What an umbrella policy isn’t. It does not cover property at all. It isn’t what it sounds like; it doesn’t cover “everything else” that the other insurance policies don’t cover. For example, if your home has a fire and you own a boat that is in the garage and it burns up, and the boat is worth $3,000 and the home policy doesn’t cover it, the umbrella policy won’t cover the boat either. The umbrella policy does not cover any property, it is a liability policy only.
Personal umbrella or catastrophe liability policies are a crucial part of insurance protection. Folks who own their own business are encouraged to purchase an umbrella policy. People who have young drivers, or families who’s homes and or assets exceed their auto liability limits should consider owning an umbrella policy. They are easy to get and very inexpensive.