What happens when you reach your liability coverage limits on your home insurance policy? You become personally responsible for the balance remaining after a claim has exceeded policy limits. If you are a homeowner, you may be forced to sell in order to satisfy any outstanding amounts you are liable for after insurance pays for a claim. However, if you have an umbrella insurance policy, you can rest at ease with less financial worry.

What is an Umbrella Insurance Policy?

An umbrella insurance policy kicks in when your home insurance reaches its limit. Just a few years ago the most common umbrella policy had limits of $1 million and cost a few hundred dollars per year. Today, many people buy an umbrella policy with a $5 million dollar limit that costs between $700 and a $1,000 per year.

Umbrella insurance policies help protect you from catastrophic financial loss that can jeopardize your homeowner status by extending your liability limits to a specified amount. For most, a $5 million policy offers adequate protection. For your exact needs, speak to your insurance agent.

Why is Umbrella Insurance Important?

In addition to a forced sale of your home, all your other assets may become subject to loss in order to settle a legal claim against you. These assets may include:

• Investment accounts
• Retirement accounts
• Checking accounts
• Savings accounts

What is Covered by an Umbrella Policy?

In addition to providing you with excess liability coverage, an umbrella policy also offers you added insurance for things that may not be covered by your home insurance policy. These added protections may include financial protection from claims of:

• Libel
• Slander
• Invasion of privacy
• Wrongful eviction
• Malicious prosecution
• False imprisonment

Some umbrella policies also offer protection if you are sued because of your service with a civic, religious or charitable organization.

Who Needs an Umbrella Insurance Policy?

Many folks believe that an umbrella insurance policy is only needed by the wealthy. This is not the case. It is equally important for all homeowners. For example, you maintain an insurance policy with liability limits of $100k/300k. A visitor trips over frayed carpeting in your home and gets injured. He sues you in court for lost wages and medical care costs. In court, he wins $150,000. Your insurance company pays the first $100,000 and you are responsible for the remaining balance. Without an umbrella policy, you may have to sell some assets in order to pay the balance of the judgement. With an umbrella policy, you may not have to resort to such actions.

How Do You Get Umbrella Insurance?

First, most insurers that issue umbrella policies only give them to consumers who have minimum liability coverage on their homeowners insurance of at least $300,000. Next, most insurers that write umbrella policies also want you to insure your home with them. Get the peace of mind you deserve and talk to your agent today about an umbrella insurance policy.

Do you have enough protection? Call Allen Harmon Insurance at (269) 441-5156 for more information on Battle Creek home insurance.