|When do you need an
do you need an umbrella policy?
An umbrella policy is intended to provide supplemental
insurance coverage in the case of a liability. While claims are
most often made against umbrella policies after automobile accidents
resulting in the death of another individual, any liability -- including
death, injury, uninsured motorist, libel or slander -- would be
Companies that sell auto and homeowners insurance
usually sell umbrella policies, which are usually offered in $1
million increments, at an annual cost of $150 -- $250 per $1 million
in coverage. Generally, the insurance company will require you to
hold either its homeowners or auto policy before offering you an
umbrella policy; this helps in the delegation of benefits.
Anyone can benefit from an umbrella policy -- especially
someone who is likely to be quoted in a newspaper, a magazine, or
through another media. Here's an example:
Let's say that you are sued for slander, and the plaintiff
is asking for $1.5 million in damages. You have $500,000 in homeowners
insurance with Company A, in addition to $1 million in umbrella
coverage. That coverage would protect you if you lost the case,
and Company A would absorb the cost of your defense because it is
in their best interest if you are found innocent.