An umbrella insurance policy, or an excess liability insurance policy, is meant to augment and or supplement the coverage provided in personal or commercial liability policies. Normally a personal umbrella or excess policy “sits over” a homeowners’ policy and personal auto policy. Make sure to speak to an independent agent about the umbrella insurance coverage discounts available.
Probably the most popular discount available to umbrella and excess policy buyers is a reduction in premium for placing the coverage in the same company as the one who has you home and auto insurance. For some companies there is no reduction, because they will only write the coverage for your umbrella if they’re the company providing the primary policies.
Some homeowner’s policies are starting to write limits of $1,000,000 and $2,000,000 on the primary policy. Although some consider this an alternative to an umbrella you should be leery. Huge court awards are more prevalent for auto than for homeowners’ policies. You don’t want to protect assets with large liability limits on your home while leaving your self with much lower limits on your auto.
Also you need to consider whether the policy you’ve been quoted to compare against increasing the limits on your home is an umbrella policy or an excess liability policy.
A personal umbrella policy is meant to provide augment and supplement your homeowner’s and personal auto policies. An umbrella will pay the difference between the primary policies limit and the limit for the umbrella. For example, if your personal auto policy has per person bodily injury limits of $250,000 and you have a $1,000,000 umbrella the umbrella will pay a maximum of $750,000 per person bodily injury liability, should you become liable.
An “excess liability” policy will provide the full amount of the face limit of the policy. In the above example the personal auto policy would pay the first $250,000 per person bodily injury loss while the umbrella would have a full $1,000,000 per person bodily injury liability protection available. So, you would have a total of $1,250,000 in coverage should you become liable.
However, the policy provisions under an excess policy might not provide as much coverage as an excess policy. An umbrella often will provide coverage for all liability losses that are not specifically excluded, while an excess policy will provide coverage only for those coverages provided in the primary policy. Excess policies are often referred to as “following form”.
Umbrella policies are often priced in part as a percentage of the premium paid for the primary policy. As such you should be careful that your home and auto policies have received all the discounts you merit.
The following coverage discount credits might apply:
- Multi-Policy Discount. You can save up to 15 percent on home insurance when you have more than one policy with a company – homeowners’, auto, umbrella, boat, and personal articles floater.
- Home Buyer Discount. This credit is available from some companies to customers who have purchased their home within the prior 12 months to the policy effective date. Could reduce your premium as much as 25%.
- Loss-Free Discount. Offered to customers who have not experienced a loss within a certain time period. Could be as much as 20 percent.
- Protective Device Discounts, such as:
- Smoke detectors and alarms
- Interior sprinkler systems
- Home security systems such as deadbolts, alarms and 24-hour security guard
- Green Home Discount. Save up to 5 percent if your home is certified “green”.
- Gated Home discount. Could be as much as 20 percent.
- New Wiring Discount. Up to 10 percent.
- Impact Resistant Roofing Discount. As much as 10 percent.
- Homeowners’ Association Discount. Could be 10 percent.
- Non-smoking discount. As much as 15 percent.
- Senior Citizen Discount. Could be as much as 25 percent.
- Passive Restraint Discounts. As much as 30 percent.
- Anti-lock Brake Discount. As much as 10 percent discount.
- Anti-theft Device Discount. Up to 10 percent.
- New Car Discount. Save up to 30 percent.
- Economy Car Discount. Up to a 10% off your premium.
- Utility Vehicle Discount . Save up to 15 percent.
- Farm Vehicle Discount. Up to 10% off.
Different companies have different discounts and apply the differently. Check with your independent agent for the best value for your money.
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Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.
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