Updated September 1, 2021

What Is an Umbrella Policy, and Why Is It Important?

Transcript

What is an umbrella policy, and why are they important? An umbrella policy is a second policy on top of your underlying policy. What it does is it spreads the cost out and makes both policies a little bit cheaper. It’s actually a really nice part of insurance.

The best way to explain an umbrella policy is in the context of an auto accident. Say that you’re driving and you’re rear-ended by somebody who has $25,000 in underlying liability coverage and then $100,000 in umbrella policy. Say that you have $100,000 of damages. The $25,000 would be taken out of the liability policy, and then what’s leftover, the $75,000, will be covered by the umbrella policy.

The reason why that’s cheaper is that the underlying policy will only have to pay up to $25,000 and the umbrella policy only has to pay in the unlikely event that the person causes damages upwards of $25,000. The costs are spread around.

Contact an Auto Accident Attorney Today

If you or a loved one have been injured as a result of a car accident, you are urged to contact the attorneys of Wilson Kehoe Winingham. An Indianapolis car accident lawyer from WKW can help you get the compensation you deserve. Call 317.920.6400 or fill out an online contact form for a free, no-obligation case evaluation.