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How to shop for umbrella insurance
A personal umbrella policy provides an additional layer of protection over the coverage already provided by your auto, homeowners or other personal insurance policies. Even if you think you have adequate insurance for your car, house or small business, a lawsuit could exceed your liability coverage. Umbrella insurance coverage picks up where the liability limits of other policies leave off.
How should you compare umbrella insurance policies?
This guide breaks down how umbrella insurance works and how you should comparison shop for umbrella insurance companies.
What is umbrella insurance?
An umbrella insurance policy is insurance coverage that protects you from lawsuits and claims that go beyond the limits and coverages of other insurance policies.
What does umbrella insurance cover?Typically, umbrella insurance provides coverage when a claim exceeds your homeowners, auto, and boat insurance policies limits.
It also covers events that are often excluded from regular liability policies, such as false arrest, libel, slander, rental homes, and damages caused by your dog.
A properly chosen umbrella insurance policy is an excellent tool to protect you from the liability gaps left by auto and home insurance policies. However, comparing umbrella insurance is difficult because they are not standardized like most auto and home insurance policies. At the very least home and auto insurance policies include similar scope and coverages across the board. Umbrella insurance policies, on the other hand, are defined by a set of exclusions and endorsements that vary from policy to policy.
Therefore, it is important to be familiar with umbrella insurance endorsements, riders, and additional coverages when comparison shopping umbrella insurance.
The list below is not comprehensive but includes some of the most common coverages included in umbrella insurance policies. Before you start asking for umbrella insurance quotes or comparing umbrella insurance company ratings, it's important that you are clear about what coverages you need.
Home and work-related coverages
- Heating oil tank pollution liability -- This coverage protects you from the property damage and cleanup costs related to a pollution liability claim.
- Restricted dog breeds coverage -- Standard homeowners insurance policies exclude certain breeds. If you own a dog from a breed that is considered dangerous check the umbrella insurance policy does not exclude yours.
- Work-related home premises coverage -- Protects you from liability risk related to a home business.
- Employers liability coverage -- If you employ domestic workers (e.g., nannies, handymen, or personal care attendants) they are excluded from most homeowners policies.
- Serving on the board of a nonprofit / volunteer work -- Just because you're working for free doesn't mean you can't get sued. This covers bodily injury, property damage, and personal injury claims arising from your volunteer work and being a member of a nonprofit board of directors.
- Assumed contractual liability coverage -- This endorsement covers the liability we assume when signing a personal contract. Remember all those "boilerplate" contracts you never fully read? This coverage protects us from the liability risk we unknowingly accept when signing a contract.
Recreational vehicle coverages
- Rental/borrowed watercraft liability coverage -- Bodily injury and liability coverage when you borrow or rent boats that are not covered by primary homeowners liability coverage, such as sailboats, houseboats, and even jet skis.
- Chartered aircraft liability coverage -- Protects you from liability for bodily injury and property damage to others when you charter an aircraft. The legal liability for damage to the aircraft's hull is not included.
- Rental/borrowed snowmobile, ATV, or RV liability coverage -- Protects from liability when renting or borrowing these vehicles, which are typically not covered by primary auto policies.
- Coverage for cars you don't own -- This coverage is valuable for people who don't have an auto insurance policy but drive other people's cars, such as an employee who drive a company car.
- Vicarious auto liability -- This coverage protects people who neither own or drive cars but who regularly require rides from friends or family as they could be held liable for accidents if the only reason the vehicle was on the road was for their benefit.
- Fellow employee liability -- Coverage for people who drive a company vehicle and sometimes have coworkers as passengers.
- International auto liability -- Protection from bodily injury and property damage liability when you rent a vehicle outside your primary auto insurance's territory.
- Collision damage liability -- This coverage protects you when you are liable for damage you caused when renting or borrowing a vehicle that is excluded from your regular auto policy.
- Auto contractual liability -- Coverage for the contractual liability you assume when you sign an auto rental agreement, whether or not you are the driver of the vehicle.
- Auto contractual damage coverage -- This provides coverage for rental car damage that you did not personally cause but for which you have agreed contractually to be liable (e.g., hail damage, theft, etc.).
What are the most important factors to consider when shopping for umbrella insurance?
Most people are not as selective when they shop for umbrella insurance as when they search for an auto or home insurance. However, you can save a lot of money and get better coverage if you invest a little time reading umbrella insurance reviews and consumer ratings.
Here are some basic factors to consider next time you shop for umbrella insurance:
- Bundle vs stand-alone policy.
- Minimum liability coverage.
- Maximum coverage.
- Umbrella insurance cost
Bundle vs stand-alone umbrella insurance policy comparison
An important difference between shopping for umbrella insurance and other insurance policies is that most insurance companies require you to first buy an auto or homeowners insurance policy with a minimum amount of liability coverage. There are a few insurance companies that offer a standalone umbrella insurance policy, but this is rare. Typically, umbrella insurance is sold as a second policy to increase your existing liability coverage.
Even when standalone umbrella policies are available it's usually cheaper to bundle it with the same insurer you have for your auto or homeowners insurance policies. You can often get a discount of 10% to 15% on your premiums when you bundle your policies.
But what if your auto or home insurer refuses to sell you an umbrella insurance policy? This could happen if your dog's breed is not covered by your company or you have made multiple claims on your insurance. In such cases, you may need to search for umbrella insurance companies that offer a standalone policy.
Umbrella insurance minimum liability coverage comparison
So why buy umbrella insurance? Wouldn't it be easier to just increase your liability coverage for your auto or home insurance policy? Well, it's usually cheaper to get an umbrella insurance policy than to increase the minimum liability coverage of your auto or homeowners insurance policies. However, the minimum liability coverage insurance companies require you to have before you can buy an umbrella insurance policy varies.
Many insurers require a minimum of $250K liability coverage on your auto policy and $300K on your home insurance policy. SuperMoney's umbrella insurance company reviews allow you to check the minimum requirements before you apply.
Umbrella insurance maximum coverage comparison
Umbrella policies usually start at $1 million in coverage. Additional coverage comes in $1 million increments.
Something to consider when comparing umbrella insurance companies is their maximum coverage. Many umbrella insurance policies max out at $3 million or $5 million. This may not be enough coverage if your net worth exceeds $5 million.
SuperMoney's umbrella insurance reviews allow you to filter insurance companies by their maximum umbrella coverage amount.
Umbrella insurance cost comparison
The cost of umbrella insurance varies by the insurer but a $1 million policy typically costs between $150 and $300 a year for the first 1 million dollars in coverage.
The more coverage you buy the lower the cost. A good rule of the thumb is to add $100 for every additional $1 million dollars of coverage.
Not all umbrella insurance policies are made equal. That is why it's important you check your policy has the additional coverage you need and nothing else. Although you don't want to be underinsured, you can also have too much insurance.
Umbrella insurance online quotesDoing an umbrella insurance quote comparison is much easier and faster when you do it online. It just takes a few minutes to filter companies based on their key differentiators using SuperMoney's umbrella insurance comparison tools.
Where can you find umbrella insurance customer reviews?
Look for independent and unbiased user reviews before you choose a company. SuperMoney provides free access to umbrella insurance customer ratings and expert reviews on leading insurance carriers. Even the best umbrella insurance companies may have a few negative customer reviews, but you should avoid companies with a pattern of unresolved complaints.
Umbrella insurance financial ratings
An umbrella insurance policy is only as good as the financial stability of the insurance carrier that backs it. Therefore, you should consider the umbrella insurance company ratings when comparison shopping policies.
There are five main insurance company rating agencies: A.M. Best, Fitch, Kroll Bond Rating Agency (KBRA), Moody’s and Standard & Poor’s. Each agency also has its own list of rated companies. SuperMoney's umbrella insurance reviews provide a financial strength rating that combines available ratings to help you determine the reliability of an insurance company. However, these ratings could change at any time so it's smart to check with the rating companies directly before making a decision.
Umbrella insurance counsumer ratings let you know how well an insurance company trains their agents and the quality of their customer care.
The bottom line of umbrella insurance comparison shopping
An umbrella policy is a pure liability type of insurance which you may use any time there is a suit against you—whether it's from a car crash you caused, a fall on your property or a dog bite. Most policies start at $1 million and go up to $10 million or more.
To compare umbrella insurance companies, follow these steps:
- Decide which types of coverage and endorsements you need.
- Check the list of umbrella insurance companies below. Find the companies that offer the coverage you want and filter them by financial rating and customer satisfaction reviews.
- Ask for an umbrella insurance quote from your top 3 choices. Make sure you use the same coverage limits, deductibles, and endorsements when comparing policies.
- Compare the cost and coverage limits of each umbrella insurance quote.
- Print out the umbrella insurance policies and read the small print. Check the endorsements and exclusions of each policy to make sure it off
Shopping for umbrella insurance policies can be a challenge. However, SuperMoney's umbrella insurance comparison reviews and customer reviews can save you time and money when comparing umbrella insurance companies.