Umbrella insurance is a type of liability insurance that you can take advantage of to supplement your basic insurance policies, like a car, home, or renters insurance. Umbrella liability policies have higher limits on what can be covered if you are deemed responsible for property damage or bodily injuries. If someone files a lawsuit against you, your umbrella policy will pay what you owe for damages up to the policy limit. Additionally, umbrella insurance policies can be used to pay for legal fees, false arrest, libel, and slander.
How an Umbrella Policy Works
Umbrella insurance goes into effect if you are found liable and ordered to pay damages, or if you need funds to pay for an attorney to represent you in a lawsuit. You can only use your umbrella policy after you have used up your basic liability limits or when the claim isn’t covered under your basic liability policy. So if a claim is filed against you and you are ordered to pay damages to a wronged party, the insurance company will pay the settlement amount up to the limits of your coverage. However, if your policy doesn’t cover the entire amount of damages you owe, then you are still responsible for paying the difference from your own pocket.
Do I Really Need Umbrella Insurance?
If you own a car or home, or if you have money tied up in investments and retirement accounts, then you need umbrella insurance to protect these assets from potential lawsuits. Without an umbrella insurance policy, all of your important assets will be exposed if you are sued and you can end up being ruined financially.
Can I Deduct Umbrella Insurance from My Taxes?
Umbrella insurance policy premiums are usually not tax-deductible. However, if you are a business owner who uses an umbrella policy to supplement your other business liability policies, then the premiums might be tax-deductible. Some landlords can also deduct a portion of their umbrella policy premiums if they rent out units.
What Should I Consider When Choosing Umbrella Insurance?
If you are interested in umbrella insurance, you need to consider the following to determine how much coverage you need:
- Potential Risks: Do you commute to work? Are you worried about being involved in a serious accident? Take the time to identify potentially dangerous activities that might put you at risk of being sued.
- Value of Assets: Make a detailed list that includes all of your properties, possessions, stocks, bonds, savings, and retirement funds.
We Can Help You Find the Right Policy
At Insurance Specialists, Inc. we are committed to helping clients choose the insurance policies they need to protect their families and futures. We know that finding the right policy can be confusing and frustrating, which is why we are here to guide you through each step of the process so you can make informed decisions. Get in touch with our professional insurance administrators today to discuss your situation.
Give us a call at (888) 451-0883 to schedule your consultation with a member of our team.