Umbrella Insurance Defined

Bismarck, ND residents know how to prepare for inclement weather, summer road trips, and Bison and Hawks football games. Here at Kramer Agency,  we want to help prepare your financial portfolio to best protect your future. Umbrella insurance does just this by adding extra liability coverage to your existing primary insurance policy.

Few people come through our door knowing about this beneficial secondary insurance policy. It gets referred to as a secondary insurance policy because you cannot buy an umbrella policy by itself. You add it to a primary policy to enhance the liability coverage.

What qualifies as a primary policy?

We’re glad you asked. Any policy that already has a liability component to it, such as homeowners’, renter’s, condo, auto, RV, etc. qualifies as a primary policy. You can’t use life or accidental death insurance as the primary policy though, because neither contains liability coverage.

For example, your home policy contains a liability component. You might have liability coverage in the amount of 20 percent of your home’s value. Your $500,000 home insurance policy provides you with liability coverage of $100,000. That sounds like a lot until something goes wrong. Perhaps someone gets injured seriously at a pool party or using your jet ski. Their medical bills and the court settlement come to a total of $300,000. It can happen if the person became permanently incapacitated by their injury, such as a person who drowned and was resuscitated but incurred brain damage. The $200,000 above what your home insurance pays comes out of your pocket.

What happens with an umbrella policy?

But if you purchase an umbrella policy to complement your home policy, you can purchase a million-dollar policy for a very small premium. That covers you completely and protects your finances. If you do need to make a claim on your liability coverage, as soon as your main policy pays out its maximum, your umbrella kicks in to pay the rest. No cost comes out of your pocket. Your financial security remains intact.

Contact Kramer Agency, serving Bismarck, ND today. You can’t afford to skip out on umbrella insurance.