What happens when your auto or homeowners insurance doesn't cover the total cost of the damage after an incident? The thought of covering additional costs out of pocket is enough to give most people nightmares. Fortunately, the stress of such a situation can be avoided if you have an umbrella insurance policy. Find out more about this type of policy and what it covers below.

What Is Umbrella Insurance?

Umbrella insurance extends the liability coverage of your other policies. The liability portion protects you in the event of damage or injury to other people due to your actions (or failure to act). For example, if you are involved in a car accident, and it is determined you are at fault, the damage to other vehicles or property or bodily injury to other drivers or their passengers (or pedestrians) involved would likely be paid from the liability portion of your policy.

When you purchase homeowners or car insurance, even if the plan offers multiples types of coverage, it is associated with a maximum amount the insurance company will pay. Once you've maxed out your primary plan's coverage assistance, you can turn to your umbrella policy to cover the bulk or all of the remaining costs, depending on the limits of your plan.

When Does Umbrella Insurance Come Into Play?

A personal umbrella insurance policy can come into play when other types of plans reach their maximum cap in an effort to reduce your out-of-pocket expenses. For instance, if a visitor sues you for $100,000 as a result of a fall on your property, your homeowner's liability coverage will be utilized. However, if it only covers $70,000 of damage, the other $30,000 must come out of pocket. This is where your umbrella coverage would kick in. You can also utilize your policy for personal liability situations, like lawsuits.

Your umbrella insurance policy covers a variety of areas, but there are some it won't. For instance, it won't cover business-related issues like damage to property, even if you run your company from your home. Such a situation would nullify the coverage. The policy coverage also doesn't extend to costs associated with illegal activities, such as intentional property damage.

Get personalized assistance choosing an umbrella insurance policy at Hummel Insurance Services in Oakland, IA. Family owned since 1944, the agency has earned the trust of southwest Iowa residents and farmers through their commitment to finding their clients policies that meet their specific circumstantial and budgetary needs. Request your free quote today online, or speak with an insurance agent directly by calling (712) 482-6424.