Let us paint a picture for you: An accident has occurred; you have 100/300 limits of liability on your auto policy – this is your lawsuit protection, $100,000 per person, $300,000 per accident – You end up responsible for damages which exceed your auto policy limits. How will you pay the difference? Well, we hope you never find out firsthand, but we want to explain what the personal umbrella policy is built for.
An umbrella policy is a supplemental policy that can be purchased, usually along with your auto or home policy. This gives you additional coverage up to $1million or more. It can provide coverage for personal liability you become responsible for. It comes into play if the liability limits of the home or auto policy are exhausted and should be considered if you have significant assets to protect outside of a standard home and vehicle. In New Jersey, if an insured has 250/500 limits of liability on an auto policy, or 300k on a home policy, they could qualify for umbrella coverage. Umbrella coverage kicks in when you are responsible for damages that exceed the liability limits of your home or auto insurance. Think of it as extra insurance.
It may be in the best interest of the insured to make sure that there is coverage above the standard home and auto insurance limits of liability. If you feel as though you may need umbrella insurance, speak with an agent to see if you qualify.
