From time to time, we get a question from someone who’s looking for the best coverage possible for their family, and we realize that it’s not a question that we hear frequently. In this case, it’s one what we wish we heard more because it’s an excellent question that more people really should ask. As we were finishing up the process of issuing a Henderson, NV Renters Insurance policy for someone, she asked,
What is a renters insurance umbrella? Is it something I should have instead of or in addition to my policy?
That’s a great question, actually.
What Is A Renters Insurance Umbrella
A renters insurance umbrella is a policy offering liability coverage, generally in increments of a million dollars, which sits on top of your existing renters insurance or other liability coverage and responds when that coverage has been exhausted.
The way it works is that your renters insurance policy is the primary coverage. Let’s say you have $300,000 of liability coverage on your policy. Unfortunately, a small kitchen fire you caused has resulted not only in damage to the apartment, but also in an elderly neighbor having to go to the hospital with smoke inhalation. Damages to the apartment might be around $25,000 and that amount is well within your renters insurance liability coverage. But your neighbor’s health insurance company is suing you for the what they paid for his medical expenses, and that’s approaching $750,000.
Your renters insurance liability coverage just isn’t enough. The umbrella has a “retention” amount, often $300,000. This is the amount that your renters insurance pays before the renters insurance umbrella policy kicks in. Once that happens, you’ll find that it behaves in a similar fashion to your existing liability coverage, except that it sits as excess coverage on top of your renters insurance.
Your umbrella policy will also offer defense coverage against claims or suits for amounts for which the policy would be responsible to pay. With a renters insurance umbrella, both the damages to your apartment and the bodily injury suffered by your neighbor as a result of your negligence can be covered by the policy instead of you having to pay for them. Your defense costs are covered. All you have to do is cooperate with the insurance companies, essentially.
There’s something else that a renters insurance umbrella can do for you. In most states, you can opt to add uninsured motorist and underinsured motorist coverage to the umbrella. That means if someone without insurance or without enough insurance hits you, you’re not limited to the uninsured or underinsured motorist bodily injury coverage on your auto policy. You have access to the additional million dollars or more of coverage so that your bills are simply paid for. The insurance company may well go after the other driver, but that’s a separate matter that you generally don’t need to worry about. This allows you to focus on recovery instead of the bills.
Do I Need A Renters Insurance Umbrella?
Many people need a renters insurance umbrella. It certainly has value to everyone from the standpoint of the uninsured and underinsured motorist coverage, of course. But if you have any significant liability exposure at all or any assets to protect, it’s worth considering.
Remember that once your primary coverage is exhausted, it’s on you to pay for defense against a claim as well as to make good on the claim if proven. Do you own a home somewhere? That would be quite a target for someone who thought you were responsible for their bodily injury or property damage. Do you have college savings accounts for your kids? Again, those could be at risk from a liability claim. The same goes for your retirement savings, in whatever form they take.
A renters insurance umbrella can cost as little as $150 per year in many cases, and it can protect you from a wide variety of risks. It’s a small expense, and the coverage is designed to give you peace of mind. Sometimes, things happen. Accidental actions can easily cause property damage or bodily injury to someone else, and you’re responsible for the costs of those actions and the injuries or damages.
When you have a renters insurance umbrella, you’re able to focus on living your life instead of worrying about how to protect your assets, or wondering what would happen if someone were to sue you. An umbrella is always wise to have, and it can even offer excess liability coverage for other types of exposures such as your auto policy, a policy you have on a boat or personal watercraft, and more. Just make sure your insurance expert is aware of those additional exposures, and that the policy is underwritten for them.
Whether you need a basic policy or a renters insurance umbrella, the insurance experts for renters at Effective Coverage can help you get covered quickly, efficiently, and affordably. Just call (800)892-4308 or click to get covered - whether you need Henderson, NV renters insurance quotes online or coverage anywhere else!
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