You may think that umbrella policies are only for the rich but that is totally not the case. In fact, umbrellas are very inexpensive and provide A LOT of coverage! Here is the rundown about umbrellas - what they are, how they work and why everyone should have one!
1. What is an Umbrella Policy? You have a certain limit of liability coverage on your homeowners or auto policy already. This is called an "underlying" limit. On your homeowners policy this limit it is referred to as Personal Liability and is usually a limit of $300,000 or $500,000. If you are held liable for an accident occurring at your home (trips and falls, etc) your policy will pay out up to this limit for damages incurred by the other party. On your auto policy, the limit is referred to as Optional Bodily Injury to Others and is typically a limit of $50,000 per person/$100,000 per accident, $100,000 per person /$300,000 per accident or $250,000 per person/$500,000 per accident. If you cause injury to another party as a result of an auto accident, your policy will pay out the damages to the other party up to the limit shown on your policy. This all sounds great but what happens if you are sued? These "underlying" home and auto limits can be wiped out very quickly in the event of a major lawsuit leaving you with a big financial burden not to mention the potential of losing your assets. The underlying limits do include defense costs but as you know, defense costs can quickly add up, eating up your limit.. and then you're on the hook for the difference... ouch. UNLESS you have a Massachusetts umbrella policy! If your underlying limits are exhausted, your umbrella policy will be tapped into to account for the difference. No problem!
2. How do Umbrellas Work? A Massachusetts umbrella policy provides excess liability protection over and above your underlying home and auto limits. Most people purchase a $1,000,000 or $2,000,000 umbrella. If you have an underlying homeowners limit of $500,000, and a $1,000,000 Umbrella, you have a total of $1,500,000 in coverage. Same goes for the auto limits. The umbrella is additional protection over your auto limit. So, if you have a major lawsuit on your hands and your underlying limits are exhausted, you can rest easy knowing that you have backup: an umbrella policy!
3. Why Should I have an Umbrella Policy? Bottom line: It's CHEAP! Believe it or not, umbrella policies are CHEAP! For the average household (1 home, 2 cars, 6 or more years of driving experience and perfect driving records) the premium is about $150.00 per year! That's $12 per month for a lot of extra coverage and most importantly, peace of mind! The cost does go up if you have more cars or own more homes ( or if your driving history isn't stellar) but it is still very reasonable given the added protection provided.
PLEASE don't hesitate to purchase a Massachusetts umbrella policy. Contact us at (978) 562-3464 to review your current coverage and inquire. Or, simply click HERE to request a quote! We look forward to assisting you and providing you with the best coverages and options.
Thomas E. Sears Insurance Agency, Inc.