Daily Dupaco

Monday, November 14, 2011

Why you need an umbrella policy

Sometimes, it doesn't pay to cut corners.

A recent survey found that one in three homeowners are buying less homeowners insurance to save money.

"You could be setting yourself up for a big surprise," says Mark Kremer, an agent with Dupaco Insurance Services. "Typically, you can't rebuild a house for what you can buy a house for. You want to make sure you're insuring that home for true replacement costs."

It's also important to not skimp out on an umbrella policy. A $1-million umbrella policy provides liability coverage beyond the limits of your auto- and homeowners-insurance policies.

"Anybody that's got any sort of assets to protect should have one," Kremer says.

Here are three things you should know about umbrella policies:

  1. It can protect you from devastating lawsuits. The average homeowner carries $300,000 or $500,000 worth of liability coverage on their home. But what if someone was severely injured or killed on your property, or in a collision that you caused? "They're not going to sue you for $500,000 and say, 'We're done,'" Kremer says. "Lawsuits are getting to be closer to a million or more dollars." If something devastating like that happened, your umbrella policy would kick in, giving you an additional $1 million after you've exhausted your liability coverage under your auto or homeowners policy. 
  2. 'It's the cheapest retainer for a lawyer.' The average person with one house, two vehicles and a clean record will typically pay $100 to $140 per year for a $1 million umbrella policy. "It's the cheapest retainer for a lawyer," Kremer says. 
  3. You might need to bump up your liability limits to qualify. Most insurers require you to carry a certain amount of liability coverage on your auto and home to qualify for an umbrella policy. Talk to your agent to find out how you can obtain one, and how much it will cost you. If you currently carry lower auto limits, you might actually save money by increasing your coverage: "With some companies, they'll give you a price break for higher limits, because they see that you recognize the importance of doing so," Kremer says.

By Emily Kittle

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