Insurance 101: What is an Umbrella Policy?

May 06, 2011
Man sitting at kitchen counter using computer

Does your coverage offer the protection you need and the peace of mind you deserve on a rainy day?

If you’re unsure, it’s time to learn about umbrella insurance. Without it, you could end up liable for more than your current homeowners or auto coverage limits.

What is Umbrella Insurance?

Umbrella insurance provides additional liability protection above what’s covered in your auto and homeowners policies. More simply, it’s peace of mind.

Liability means that someone is held responsible for something. If you own a car and are in an accident—from a fender-bender to something more catastrophic—you may be sued for liability. Homeowners and auto insurance policies often have a liability limit of about $300,000. An umbrella policy could insure you for up to $1 million in damages.

Who is Umbrella Insurance For?

Because every claim is different, let’s consider a couple of different possible scenarios below:

  1. Your dog runs through a fence and bites a passing child in the face. Suppose that reconstructive surgery is required, but also, consider that a child changes and grows and it’s likely that multiple reconstructive surgeries would follow. Homeowners insurance may cover costs up to a certain limit, and an umbrella policy may help extend the liability coverage.
  2. You’re involved in a car accident in which someone is paralyzed. She needs long-term care, and the liability limit on your auto insurance isn’t enough to cover her healthcare costs. An umbrella policy may increase your limit to offer you more protection.

The Bottom Line

The average cost of an umbrella policy between $20 to $25 a month. That cost, however, is offset in the event you do suffer a catastrophic occurrence.

Learn more about our personal umbrella insurance or call your Nationwide Insurance agent to find out how an umbrella policy might work for you and your family.

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