What is an Umbrella Insurance Policy?

Your umbrella insurance policy covers you for items that may not be included in your other lines of coverage. The term "umbrella" is used to describe how the policy catches items coming from unexpected areas. When you are not specifically covered for an unforeseen claim under your property or liability lines, you may be able to file the claim anyway with the right umbrella insurance.

Find Out if You Need an Umbrella Policy

Not everyone needs an umbrella policy. If you have kept track of your unforeseen losses for a couple of years, you may be able to determine you do not need the policy. You can ask your insurer for a list of claims, but you will personally have to check to see how much you have lost by not filing a claim. Then, question how much money you would have saved if those unclaimed losses were filed. Divide this by the number of years you are reporting. 

Next, ask your insurance company how costly it would be to add an umbrella line to your policy. If the premium per year is lower than you lost each year in unclaimed losses, you may benefit from the policy. You can present the list of losses to your insurance company to see if they would be covered under an umbrella policy.

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