Excess liability insurance provides additional coverage above the liability limits set by your other policies, such as home and auto insurance.
This insurance is sometimes called an “umbrella” policy for this reason.
The question is, how do you know when you need more coverage?
And the short answer — especially when it comes to getting insurance coverage — is… that depends.
Reasons for getting excess liability insurance
Just about every type of insurance policy (generally speaking) outlines a limit for the amount of liability coverage you receive from the policy.
For example, your:
- auto insurance policy
- homeowners insurance policy
- rental insurance
- business insurance
- professional liability policy
all outline on the declaration page just how much coverage you receive reliability along with the premium cost for that coverage.
So why get excess liability insurance?
Because dollar for dollar the amount of liability coverage you can get through an “umbrella policy” will be cheaper than buying the family coverage in one of the other policies. Think of it this way, you could pay for more liability coverage on each and every policy you have, or simply get one additional policy and increase your insurance coverage.
Makes sense, right?
Now, it’s typically a good idea to purchase this type of coverage if you have an increased exposure to financial risk.
Examples may include owning a luxury car, having a vacation property, or owning and maintaining your own business. If you’re a “C Level” executive or professional (i.e. doctor, lawyer, pharmacist) getting additional liability coverage is a good idea.
If any of these situations apply to you it’s probably a good idea to talk with an independent insurance agent and ask about getting this coverage.
After all, turn on the news on any given day and it’s fairly obvious that we live in a very litigious society these days. And anyone perceived as being in “the 1%” can understandably feel that people see them as “the problem.”
For this reason high net worth individuals typically purchase this type policy to protect their assets and their interests.
So how much is enough liability coverage?
The only way to know if you truly have enough coverage for your given situation is by talking with a knowledgeable insurance agent who can review all the details and help make a determination as to how much coverage is enough coverage… for you.
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Either way the choice is yours…