Anyone who drives needs auto insurance to comply with state regulations. Some drivers need more coverage than others due to increased risks, such as drivers who go on long commutes and vacations. An umbrella policy is one way to gain extra coverage at an affordable price.
How an Umbrella Policy Works
The two main components of car insurance, mandated by state laws are liability for bodily injuries and property damage. This means if you cause an auto accident, your insurance policy will pay for the victims’ medical and car repair bills up to the coverage limit.
If the cost of injuries and damages exceeds the coverage limits, the at-fault driver can get sued by the injured for unpaid bills.
Umbrella Policy Coverage
The best way to avoid a financial setback after an auto accident is to get an umbrella policy with car insurance. It will extend your coverage to $1 million at a low cost. It will also allow you to customize your coverage limit instead of a one-size-fits-all policy. So, if you’re involved in a serious accident, an umbrella policy will most likely cover all the expenses incurred. You can get umbrella coverage up to $5 million in some states.
Why Should You Get an Umbrella Policy?
An umbrella policy is worthwhile for certain drivers, especially those who own large assets. You certainly don’t want a lawsuit to drain your assets if your car insurance doesn’t cover all the costs of an accident. An umbrella policy with a high coverage limit helps protect your home and other assets.
Other drivers who should consider an umbrella policy are commuters, dog owners, and those who provide carpooling for passengers. Commuters who drive over 50 miles per day are at higher risk of getting into a collision than low-mileage drivers.
If you are a rideshare driver for Uber or Lyft, these companies may provide auto insurance up to a certain limit. Your umbrella coverage can reimburse victims if costs exceed the coverage limits of the company you work for.
An umbrella policy may also be useful to homeowners who own dogs of certain breeds that are considered dangerous. Dog bites can sometimes lead to over $30,000 in hospital bills. So, if you own such a dog, consider umbrella coverage to protect your assets from getting drained in a lawsuit.
Cost of Umbrella Policy
A $1 million umbrella policy can range from $150 to $300 in annual costs. If you want to raise the coverage limit by $1 million, it only costs an extra $50 to $75 per year. However, like all auto insurance policies, exact costs depend on multiple factors.
Your age and the zip code where you live are key factors that affect your premiums. Usually, the youngest and oldest drivers pay the most auto insurance. A clean driving record helps to lower the cost of premiums.
Think about an umbrella policy with car insurance as a form of risk management. The more vulnerable you are to auto-related risks, the higher your benefits are from umbrella coverage. At John E. Peakes Insurance Agency, we can help you navigate the complex world of auto insurance with ease. Contact us today to learn more!