A personal umbrella is sometimes called "extended liability" because it goes past the liability limits of other policies. In the case of a claim, your insurance with have liability coverage that protects you up until a certain amount. Once this amount is reached, the balance that is left is up to you to settle. This can be done in several ways, such as paying out-of-pocket, through wage garnishment, acquisition of assets, and others. However, an umbrella policy will be used to further cover the costs once the original insurance policy's limits have been reached. They 'pass the baton' between each other and make sure that you don't have any costly damages made to your finances.
The amount of excess liability purchased is dependent on how much coverage you want/need, and what your assets are. If you are at a possible risk of being sued for higher damages, then a larger umbrella policy should be purchased to cover the costs. Umbrella policies combine with insurance that provides liability in the case of damage caused to others, such as homeowners, auto, or boat insurance, and so the policy that the umbrella is extending plays a key factor in determining the size of the umbrella. An umbrella policy can be used in cases such as property damage, bodily injury, malicious prosecution, libel or slander, and expensive court fees, and so coverage should be calculated and purchased based on what it may be needed for in the future.
Depending on your insurance provider and the specifics of your policy, the costs will fluctuate. However, most policies follow a similar cost rate, and so here is an estimate of what an umbrella policy would cost per year.
Methods of saving money with an Umbrella Policy will fluctuate from provider to provider, although typical options include the following