Umbrella Policy – Why Purchase an Excess Liability Insurance Policy

Anyone who drives has car insurance, but how well are you protected, really? Adding excess liability insurance to your insurance policy is akin to buying extra protection for yourself and your loved ones.

This type of additional liability coverage is called an umbrella policy, because it insulates you against “rain” in the form of liability if you are at fault in an accident and wind up being financially liable for a significant amount of money.

Umbrella coverage allows you to buy from $1 million on up to $5 million worth of personal liability protection above and beyond the policy you already have in place. Umbrella coverage adds layers of protection that can insulate you against risk.

For example, a typical car insurance policy has limits of $100,000 for each person and $300,000 for each accident. The most that can be purchased is a maximum of liability protection of about $500,000 per accident. In an accident in which the policyholder is at fault, and there are substantial medical costs to the other car’s driver and passengers, that money can get gobbled up quickly.

Umbrella Policy — Kicks In Where Your Regular Insurance Coverage Leaves Off

An umbrella policy, however, can kick in at this point and will cover any costs beyond the typical insurance policy limits. It picks up payment once your car insurance policy hits its liability limits.

Excess liability coverage will also address the problem of uninsured and underinsured motorists. When you have an accident involving a driver who does not have enough insurance to cover your damages, your extra liability coverage can cover the costs of medical treatment and other accident-related damages.

Generally, insurers require that you carry a specific amount of liability insurance in your primary insurance policy before you are eligible to purchase excess liability coverage.

Factoring In the Cost of Extra Coverage

You need to balance cost factors against questions like these:

  • What assets do you need to protect and how much are they worth?
  • What is the future value of your assets?
  • Do you participate in activities that put you at risk for an accident?
  • Do you have teenagers who drive and who are known as higher-risk drivers?
  • What will it take for you to feel reassurance that you have enough protection in the case of an accident?

Contact New Jersey Attorney Adam M. Kotlar

At the Law Offices of Adam M. Kotlar, we represent the injured. If you have been injured in a car crash, we are here to help. Please call our firm at Local # :(856) 751-7676. You may also contact us online. We will return all calls and e-mails promptly.