Understanding Auto Insurance: What Are Umbrella Policies and Do You Need Them?

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Understanding Auto Insurance: What Are Umbrella Policies and Do You Need Them?

When you were purchasing your auto insurance policy, your insurance agent may have mentioned adding an umbrella policy to your existing coverage.  While many want umbrella coverage so that they have additional protection from liability, an umbrella policy may also provide coverage for injuries you receive during an accident because of someone else’s negligence.  This would occur when the at-fault driver is underinsured (i.e. when that driver’s insurance limits are insufficient to cover your medical bills, lost wages, and pain and suffering). However, most umbrella policies do not automatically provide coverage for an underinsured claim, and this coverage usually must be purchased separately.  Thus, in most instances, you must specifically ask for and pay an additional premium in order for your umbrella coverage to provide an underinsured benefit as well.


So What is Umbrella Insurance?


Umbrella insurance is extra coverage in addition to your existing auto and/or homeowner’s insurance.

Umbrella insurance is intended to raise the maximum coverage on your policies, to cover what could otherwise be a financially devastating event.  For example, if you are involved in an accident which is your fault, and you cause another person catastrophic injuries or death, an umbrella policy would provide coverage in addition to your auto liability policy.  In most instances, the policies include a setoff so that the most coverage you have is determined by the umbrella policy. Thus, if you have a $250,000 auto liability policy and a $1,000,000 umbrella policy, it is likely that the policies are written such that the auto policy would pay $250,000 and the umbrella would pay $750,000 for a total of $1,000,000.  In addition, umbrella coverage is relatively inexpensive.


Umbrella Policies for Uninsured and Underinsured Coverage


It is important for anyone purchasing an umbrella policy and to make sure that the umbrella coverage also applies to uninsured and underinsured claims.  In general, this type of coverage must be specifically purchased as most umbrella policies to not automatically provide uninsured and underinsured coverage.  Uninsured and underinsured coverage apply when an at-fault driver is uninsured or can’t be found, or if the at-fault driver doesn’t have enough insurance.

For example, if another person injures you in a car accident, and that person only has $25,000 in liability coverage, but your damages total $500,000, your umbrella policy (if you made sure to ensure that the umbrella policy applies to underinsured claims) will cover the additional $475,000.


Contact Your Personal Injury Lawyer First


If you have been injured in an accident, it is always prudent to speak with an attorney before talking with an insurance company or filing a claim for personal injuries or property damage.  If you have been involved in a car accident, or if you want to talk with an attorney about making sure you have adequate insurance coverage, call Aaron House today for a free consultation at 816-875-4260.

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