What should I look for when purchasing umbrella insurance?

All of us have heard the term "policy limits" when buying auto insurance or homeowners insurance, but most likely never gave it much thought. Simply put policy limits are when your insurance stops paying and you are liable for losses past the policy limits.

Say you have an auto insurance policy with $100 thousand liability insurance per person and $300,000 per accident. This means that if you injure an individual in an auto wreck and are sued successfully for $250 thousand you are on the hook for additional $150 thousand dollars.

The way to gain protection above your policy limits is to purchase an excess liability policy. These policies are often called "umbrella policies."

Buying Umbrella Insurance

Before you go purchasing an umbrella policy you must check on your auto policy and homeowners/renters/condo insurance policy. When you buy an umbrella policy you must have certain minimum liability coverage in those basic policies. Usually for auto insurance it is $100/$300 thousand.

Generally the least amount of coverage you can buy when purchasing an umbrella policy is $1 million, but many folks opt to extend their liability coverage for personal damage and injury to as high as $5 million. They do this because the additional coverage is very affordable.

Things to Do When Purchasing an Umbrella Policy

  • Make sure the policy covers the cost of legal defense or negotiations in the event you are sued
  • Exposure to slander and liable claims is greater in the age of the Internet, make sure this is a covered risk
  • Before you buy get a sample policy and look over all the issues that are covered, even better, get two or three sample policies in order to compare coverage.
  • Once you have decided on all the coverage you want get quotes from three insurance companies, you can do this online or through your broker if you have one.

Umbrella policies are not for the rich only. An accident or incident can endanger all your assets, including your home, your savings and if you are a business owner even your business. Coverage expense is very affordable and the peace of mind you have knowing you have protected yourself is well worth the cost.

How Are You Covered Under Minimum Auto Liability Insurance?

Under minimum auto liability insurance, a requirement of all states, individuals have very little protection. Under most state laws, drivers must carry a specific amount of auto liability insurance. This insurance provides protection to other drivers who you may be involved in an accident with. It provides you, as the driver, with protection from the financial hardships of trying to pay for this type of damage on your own. However, there are numerous limitations to know about.

What Is Covered?

The first thing to know about liability insurance for your auto is that it provides coverage for damages you cause or are otherwise responsible for after an incident. It may cover damage to another vehicle or the property of another person. If you run over someone’s mailbox, the repairs to the mailbox are covered. If you are in a car accident with another vehicle, the costs related to the repairs for that vehicle are covered.

What’s Not Covered?

Most of the time, these insurance products do not provide you with a large amount of coverage in terms of your own property. For example, the damage to your vehicle form hitting another car or running over the mailbox are not included. This also means any damage to your health is not included. These you will need to pay for yourself unless you have additional policy protection.

How Much Is Covered

It is also important to realize that under minimum auto liability insurance, the insurance company covers damages up to the amount of coverage you have. If you hit a $50,000 car and ruin it but your policy is only for $30,000, you are personally, financially responsible for that other $20,000 worth of damage. For this reason, it is a good idea to have more than the minimal amount of insurance. You likely need to have more than what your state requires as minimum.

Are you sure the insurance coverage you have is enough? In many cases, it will not be unless you take the time to talk to your agent about your specific needs. Having enough insurance is critical. It is also necessary to have the right provider for your policy needs. Do not overlook the importance of this type of insurance. It keeps you legally able to operate a vehicle, but it also gives you financial protection from many "what if" situations that could occur.

Why Did My Insurance Premium Increase When I Haven’t Had a Claim With My Insurance Carrier?

Opening your insurance renewal packet can be a scary thing because even if you haven’t made a claim, your rates could still increase. This is because your insurance carrier uses a wide range of factors to set rates. In addition to a minor increase in your premium due to inflation and cost of living, here are some of the other most common reasons why your premium may have gone up when you renewed your policy.

Traffic Ticket

Your insurance carrier has access to driving records in your state and use your history to set rates. If you have received a traffic ticket for speeding or another similar infraction, the ticket could cause your premium to increase. In fact, a traffic ticket can increase your rates even more than a claim, particularly if you weren’t deemed at fault in the claim.

Lower Credit Score

Some states allow your insurance carrier to take your credit score into consideration when setting your insurance premium. In this situation, if your credit score drops, you could find yourself paying more for your home or auto insurance. Therefore, be attentive to paying your credit-related bills on time every month and keeping your balances on credit cards low with respect to your credit limits.

Driving Different Vehicle

The car you drive has a big impact on the rates you pay for insurance. You’ll likely see your premium for comprehensive and collision coverage go up if you switch to a newer, more expensive vehicle or one that is statistically more likely to be stolen. Your liability rates depend more on the extent of the damage that vehicle most often causes in an accident and the statistics on how often that particular vehicle is involved in accidents.

Moved to New Location

Insurance premiums depend largely on where you live, both because of state laws and because of statistics on the cost of auto accidents in that area. For example, you’ll likely see your rates go up if you move from a rural area to a densely populated area because there are more vehicles on the road, and therefore, you’re more likely to get into an accident with one of them. Comprehensive coverage for vehicles also depends on theft and vandalism rates in your area and the type of parking you have available.

How are you Protected from Uninsured Drivers?

It’s one of those unwritten rules of driving–the first time you get into a really bad accident, the driver who causes it will be uninsured. It’s surprising that there are so many uninsured drivers on the road, since most states have some sort of mandatory insurance laws, usually with stiff penalties for uninsured drivers. Still, there are a lot of people driving without insurance and it’s important to learn how to keep yourself protected from them.

In terms of damage to your vehicle, the best way to protect yourself from uninsured drivers is to have collision insurance. Collision coverage will cover the cost of repairs to your car after an accident, regardless of who is at fault or whether or not they have insurance. Collision insurance even keeps your car protected in the event of a hit and run accident or if you cause the accident yourself.

Car damage from an uninsured motorist can be frustrating and expensive, but physical injury to yourself or someone in your car can be catastrophic. The best way to protect yourself and your passengers from the medical costs and other expenses associated with an accident caused by a driver without insurance is to have uninsured motorist insurance. This coverage is specifically designed to pay for your medical expenses when the person who caused the accident that hurt you was not insured. Another good coverage to have is underinsured motorist insurance, since just because someone has insurance, it doesn’t necessarily mean that they will have enough coverage to pay for all of your costs.

It is important to note that in a "no-fault" insurance state, personal injury protection (PIP) insurance is an effective type of policy to have for paying for injury expenses that stem from an accident caused by an uninsured driver. Since fault is not assigned to a driver in a no-fault state, each person involved in the accident is basically responsible for their own injury expenses, either paying them out of pocket or with PIP insurance.

Uninsured drivers are a hazard on the road, just like potholes, wet pavement or drunk drivers, and a smart driver would be wise to learn how to prepare for them. With the right combination of collision, uninsured motorist and/or PIP insurance coverage, a driver can make sure that they are protected from at least the financial damage that uninsured motorists can cause.

Why is Personal Liability Insurance Important?

The intent of personal liability insurance is to protect the insured from staggering financial jeopardy if involved in an event that causes damage to another’s property or bodily harm to others. It is also designed to protect business professionals from overwhelming financial exposure in the event of harm caused to others during the course of business.

Three Common Kinds of Protection Automobile Property and Liability Insurance

All car owners in 49 of the fifty states are required to carry minimum property and personal liability insurance. These are statutory minimal requirements. The amount of required coverage varies by state. Many motorists realize that the state mandated coverage does not offer enough protection to them and frequent by policies known as 100/100/300. This means that they are covered for $100 thousand dollars in property damage for an accident and also covered for $100 thousand per person for medical care per person per accident to a maximum of $300,000 per accident. These coverages also include protection in the case of a fatality.

Homeowners, Condo Owners and Renters Insurance

All of these policies provide coverage in the event of theft or fire in the insured homes. Most policies also include protection in the event someone suffers bodily injury while at your residence. Because this coverage is inexpensive most people who carry this kind of insurance have coverage for $100 thousand in medical payments or death benefits.

Professional Liability Insurance

In addition to professional liability insurance providing coverage for harm done to others by a business professional it also covers the legal expenses attendant to either defending the claim in court or negotiating a settlement.

However, all of the three kinds of policies are usually insufficient to protect high net worth individuals should they be involved in an incident that causes bodily harm or a fatality. Thus, their insurance advisors usually explain how important it is for them to acquire an "umbrella policy" to increase their protection against financial claims.

Umbrella Insurance

Personal umbrella liability insurance gives insureds additional liability coverage that covers any excess damage or injury that exceed your auto, home or professional liability insurance coverage. It is known as umbrella insurance, "additional personal" liability and "personal excess."

The more you have the more protection you need as your exposure increases in direct correlation with your wealth. It is best to discuss your personal liability coverage with your insurance advisor.

What You Need to Know about Property Damage Coverage

Property damage coverage is a requirement in the United States. All drivers must have at least $5,000 worth of property damage coverage per accident, if not significantly more. This type of coverage provides protection for repair expenses to damage done to another person’s property, but not to your own. Most states actually require significantly more than the federal level of required coverage.

Why You Need More

It is important to know that this type of protection is often necessary at a higher rate beyond these state and federal requirements. It benefits you to have more protection. If the vehicle or other property damaged is at a significantly higher value than the amount of insurance protection you have, you, as the driver, are financially responsible for covering the remaining difference. More so, this could leave you in a poor financial situation if you do not have the funds to cover a large accident.

How to Buy It

To buy property damage coverage, consider what your needs are specifically. The amount of coverage you get depends on your state’s requirements and your desired level of protection. To reduce costs, consider the following:

  • Packages that bundle property damage insurance with liability coverage may save you money compared to buying them separately.
  • Ask your agent for recommendations on how much to purchase based on previous claims for vehicles like your own.
  • Know that this insurance does not cover your vehicle in any way. It covers the other person’s property. This means that having comprehensive coverage, or another form of insurance, is a good idea if you want to protect your investment.

Do take the time to compare your options. The costs of property damage insurance range significantly from one company to the next. However, when comparing policies, make sure to compare the same type of policies to each other. Look at the difference in coverage options, discounts, and deductibles you may need to pay.

Ultimately, you need to have property damage coverage if you are a driver or a vehicle owner. Not doing so could put your financial future on the line and even jeopardize your driving privileges. To avoid this, purchase a policy that provides adequate coverage for potential accidents and damage to property. Whether it is another car or someone’s other property, the costs can rise sharply beyond a basic policy or state-limit policy. Look for the policy right for you instead.

How Can Auto Accidents be Prevented?

Any driver who has been in an accident knows the feeling of surveying the damage afterwards and wondering whether it could have been prevented. Although there are times when there’s nothing you can do to prevent an accident because you’re the victim of another driver’s negligence, most accidents are preventable. Keeping yourself from getting in an accident not only saves you from having to make an insurance claim, but also protects your health and the health of others on the road. Here are some strategies to keep yourself from getting in accidents.

Don’t Multitask: Many accidents occur because of divided attention. If you’re trying to do something else while you drive, less of your mental focus is on the road, other vehicles around you, and traffic signs and signals. Therefore, if at all possible, avoid multitasking while you’re behind the wheel. This includes obvious culprits like talking on the phone, texting, and putting on makeup, but also some less obvious behaviors. Eating while you drive, talking with people in the car, and even changing the radio station can all take your attention off the road.

Learn Defensive Driving Habits: Taking a short online or classroom defensive driving course equips you with the basic skills to learn how to recognize and avoid potential accidents. In some cases, you’ll even qualify for a discount on your auto insurance after successfully completing a course. Some of the most important skills include scanning the road ahead of you for potential hazards (which include hazardous drivers), always having an escape route in mind, and driving in the center lane to give yourself more options for escape.

Know Your Condition: Never drive drunk, and when in doubt of whether or not you’re drunk, play it safe. In addition, don’t drive when you’re tired. That deductible on your policy, and the subsequent premium increase, is much more expensive than a night in a hotel in the middle of a long road trip.

Maintain Your Vehicle: A vehicle in good condition is more able to respond quickly in a situation in which an auto accident needs to be prevented. Replace your tires when they’re getting worn, maintain your brake pads and braking system, and check your fluid levels to keep your systems in top conditions. These will help your car respond as you’d like it to when performing accident avoidance maneuvers.

Auto Insurance Claims: Items you Need when You Make a Claim

Although no one ever wants to be in an automobile accident, the reason you have auto insurance is so you are protected if it ever happens. Making sure you have the best policy for your situation is also important. If you have a new car, with or without a lien holder, you should make sure you have comprehensive coverage. Even the smallest fender bender could make a mess of your car and you will want to fix your ride as soon as possible.

The first thing needed when making an auto insurance claim is the information about both parties involved. If you were at fault in an accident, you will need not only your own information, but also that of the other party. Make sure you have your insurance policy number available and the make, model and year of the vehicle. Of course before exchanging information, if there are injuries, call 911 and report the accident.

The next item you may need when making an insurance claim is the police report. Often, the insurance company will want official documentation about the accident, the people involved, who was at fault and if there were any witnesses. Usually this is important if the claim is large and there is personal injury involved. If the accident was small and the claim will be less than $500, the insurance company may not require as much information.

If the damage was only to your vehicle, the insurance company will want to send an adjuster to look at the car. You may also need to take the auto and get 2-3 estimates to fix the damage. Insurance companies are not just going to take your word for how much the damage will cost to fix. Depending on the company, they may ask you to see one of their own repair shops.

Finally, although there are many items needed when filing a claim with your auto insurance company, once your vehicle is repaired it will be worth the time and trouble. When working with a great insurance company, you will not need to worry about long delays or bad customer service. When you are comparing quotes for the best plans, take all of this into consideration and find an insurance company that will be there when you need it.

What is the Average Time that a Claim is Processed or Settled?

If an accident or break-in leaves your car or home vulnerable to damages or loss, you will probably rely on your homeowners or auto insurance policies to repair the damages in an appropriate amount of time. However, depending on the extent of your losses and the size of your claim, processing and settling a claim can take days or even weeks.

How it Works

After an incident occurs, an insurance adjuster is assigned to review your case and determine how much compensation you are entitled to. Some insurance companies take several days to review your case and determine your eligibility for compensation. At this time, you may be asked to acquire repair or replacement estimates — especially if the claim is related to losses sustained in an auto accident. Your insurer will then either offer to cover the full cost of your repairs, minus the deductible, or you will be offered a settlement amount, which you can accept or deny.

Keep in mind that the average time for claims to process is usually much shorter when the only damage or losses are related to property. If you are filing a personal injury claim as well, your case may take longer to process, as insurers will require copies of medical bills and possibly, a statement from you physician. Also, if you deny an insurance settlement, your case may go into a mediation process through your insurer to determine whether you should receive a higher payment. If your case goes into mediation, it may take an additional two to six weeks to settle.

How You Can Accelerate the Process

Depending on the nature of your claim, you can accelerate how long claims are processed or settled through your insurer in a number of ways. Start by always getting a police report at the scene of the accident or crime — no matter how big or small it is. Provide the contact information of witnesses, and ask to schedule a time to meet with the adjuster to inspect damages. If your adjuster asks for pictures instead, ask to email them, rather than send them through the mail.

Car Insurance Coverage for Seniors

As people get older, their car insurance needs may change. When considering car insurance for senior citizens, you will need to take into account any health problems they may have, how much they drive their car and where they live. Since the insurance company may have different requirements for seniors, you will need to look at the policies carefully and make sure there is an adequate amount of coverage.

Senior citizens sometimes experience failing eyesight or hearing which could affect their insurance premium. If you know your loved one has a problem seeing or maybe just shouldn’t drive at night, make sure her insurance policy carries enough protection to take care of expenses in the event of an accident. You also need to consider how much the senior drives his car. If he really doesn’t drive often, but usually catches rides with friends and family, he probably will not need as much car insurance. Where the senior citizens live should also be considered. If they live in a nursing home or assisted living that provides transportation to most places, the requirements for car insurance coverage will not be as great. When comparing policies for seniors, think about how much coverage the person actually needs and make sure the policy fits the situation.

Car insurance coverage requirement vary from state to state and from situation to situation. As people get older, they may choose to drive less and in effect need less coverage. Or they could continue to drive, even when they shouldn’t, which would require more protection to take care of expenses if an accident occurred. The best way to make sure you have the coverage you need is to compare quotes with multiple providers and find the protection you need for the price you want to pay.