An umbrella auto insurance policy is a way to protect your personal assets in the event of a major accident or if you are sued in a lawsuit. It is sometimes referred to extra or excess liability insurance.
This is an insurance policy that can supplement your existing insurance policies and only kicks in when your policy limits are exhausted for your other insurance coverages.
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The Basics on an Umbrella Auto Insurance Policy
Even if you already have the basic auto liability required by state law and enforced through the state department of motor vehicles, you may want to consider extra auto insurance coverage options based on your personal assets and circumstances.
Some of the most popular forms of supplemental auto insurance include:
The amount of supplemental auto insurance coverage you carry depends on many different things. If you do not have the ability to pay out of pocket if you are at fault for a major auto accident, then supplemental auto insurance can help cover the difference.
Where an umbrella auto insurance policy comes into play is when your other coverage limits are exhausted in an accident or even if you are sued in court, then this policy can make up for the difference.
You may be surprised to find out that your umbrella auto insurance policy also kicks in for coverage when you have exhausted your limits through your home owner’s insurance policy.
A good way to think about an umbrella auto insurance policy is that it is essentially an extra layer of protection on top of your existing auto insurance policies.
If you already have auto insurance through an insurance company, then you will probably seek out an umbrella auto insurance policy through the same company if you are considering extra coverage.
What Types of Damages Does an Umbrella Auto Insurance Policy Cover?
The best way to think about an umbrella auto insurance policy is that it covers damages for which you would otherwise be responsible for paying out of your own pocket.
For example, if you are in an auto accident and determined to be at fault for the damage, an umbrella auto insurance policy would supplement your coverage when your other policy limits are exhausted.
However, if another driver were at fault for the auto accident and did not carry enough auto insurance, an umbrella auto insurance policy would not kick in to cover the damages to your car.
This is where you would actually be covered under an uninsured or underinsured motorist insurance policy. You could recover up to your policy limits under that supplemental coverage to have your car repaired or your medical bills paid for.
What you may not be aware of is that an umbrella auto insurance policy will also protect you if you are sued by another person. The lawsuit does not have to be limited to damage from an auto accident.
In fact, you do not even have to actually be sued to have your umbrella auto insurance policy coverage kick in. As long as there is some liability claim against you, your umbrella auto insurance policy will cover any excess liability you are responsible for.
If you own a dog and it happens to bite another person, your umbrella auto insurance policy can help prevent you in the event that a lawsuit is filed against you for the injuries suffered by the victim.
In some cases, your home owner’s insurance will not cover a dog attack if you have a certain aggressive dog breed. That is where having an umbrella auto insurance policy can help to make up the difference in protecting your assets.
Umbrella Auto Insurance Policy for Professionals
Many professionals also use an umbrella auto insurance policy as a form of professional liability insurance.
Even if you have an existing professional liability insurance policy or a business owner’s insurance policy, you may still find yourself facing a lawsuit that could end up in you having to pay out of pocket for the rest of the damages that are not covered by your existing policies.
Some of the professionals that are at high risk for professional liability claims include:
- financial planners
If you fall into one of these categories, you will want to examine your professional liability insurance to see if there is a good reason to have supplemental coverage through an umbrella auto insurance policy.
Getting an Umbrella Auto Insurance Policy
A good place to start in checking into an umbrella auto insurance policy is with your current auto insurance company.
If you are looking into additional coverage, this is probably a good time to ask for additional quotes to make sure that you are paying the lowest possible rate on your auto insurance policy.
Another thing to keep in mind is that an umbrella auto insurance policy also works in tandem with your homeowner’s insurance policy.
If you already have a homeowner’s insurance policy, you should consider combining this policy with your existing auto insurance policy and umbrella auto insurance policy in order to get a better discount on your auto insurance coverage.
Wrap Up on Umbrella Insurance Coverage
There are plenty of good reasons why having supplemental insurance coverage is a good idea. It only takes one major lawsuit to wipe out all of your personal assets if you do not have the proper protections in place.
With an umbrella auto insurance policy, you can have the additional coverage you need to cover any damages you are responsible for in an auto accident or from a lawsuit that is filed against you.
You should shop around for the best quote on this coverage, just like you would for your auto insurance coverage. Start shopping now by using our rate quote tool below!