Umbrella auto insurance coverage is put in place to provide the policyholder with an extra level of protection when an at-fault accident occurs. The standard auto insurance policy provides liability protection for bodily injury and property damage claims, but it only pays out up to the policy limit the driver has decided to buy. Any damages owing above this amount are the driver’s responsibility.
To bridge the gap between the available level of coverage and the actual damages being claimed, vehicle owners can get umbrella coverage. It can provide a higher policy limit than an auto insurance provider is comfortable covering, and it may be less expensive to buy umbrella protection than to increase the level of coverage on the main auto insurance policy.
The umbrella insurance policy can provide up to $5 million in additional coverage to a driver. A person who has $100,000 or more in assets to protect can benefit from this type of policy. An accident which causes severe and permanent injuries can exhaust the available coverage in the auto insurance policy very quickly. The umbrella coverage gives the driver peace of mind and lowers the risk of having to liquidate his or her assets to pay for damages caused in an accident significantly.
This type of coverage also tops up the policyholder’s homeowners’ or renters’ insurance policy. It pays for the cost of legal fees associated with defending a claim for damages made under either type of policy.