Umbrella Insurance Policy With Uninsured And Underinsured Coverage

Nov 16, 2021 | Personal Insurance

There are several types of insurance policies that you would need for your own protection. You should have an umbrella insurance policy with uninsured and underinsured coverage. Plus, you need auto insurance if you have a car. You will at some point in your life need health insurance, life insurance, or disability insurance too. However, all of these have coverage limits that may force you to shell out money if you reach the limits. To avoid out-of-pocket expenses, you would need a policy that will serve as an extra layer of protection that is designed to protect your assets and savings from large liability claims. This is called the Personal Umbrella Policy.

PERSONAL UMBRELLA POLICY

An unexpected event that causes injury or loss of life can create huge financial problems. If a visitor slips in your driveway and bangs his head which leads to a head injury, your homeowners’ insurance limit may not be able to cover the medical bills. A personal umbrella policy is an extra protection that goes beyond your standard policy limits. An umbrella policy covers injury to others or their property and possessions. It does not include coverage for yourself or your property.


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UNINSURED MOTORIST (UM) and UNDERINSURED MOTORIST (UIM) COVERAGE

Does An Umbrella Policy Cover Uninsured Motorists?

When purchasing a personal umbrella policy, you have the option to get UM or UIM coverage. This is your protection if you get injuries or if your property is damaged in an accident. Let us first define each coverage to understand them better.

UNINSURED MOTORIST (UM)

An uninsured motorist means that the other person you are in an accident with has no auto insurance. If that person crashes your car, you will be paying for your own car repair or medical bills if you get injured. The same thing will happen if you are a victim of a hit-and-run driver. You need to pay for car damages and your injuries caused by them. 

Does An Umbrella Policy Cover Underinsured Motorists?

UNDERINSURED MOTORIST (UIM)

Underinsured motorist means that the other person involved in the accident has car insurance but whose liability limits are too low to cover damages and injuries.  Most states only require the minimum amount of liability insurance and it may not be sufficient for the damage or bodily injury cost. 

What is part of UM and UIM?

Both coverages include:

  • Uninsured/Underinsured Bodily Injury Coverage – pays for medical bills for you and your passengers if you are in an accident and the at-fault driver does not have insurance or not enough insurance to cover the bills. It also pays for pain and suffering and lost wages.  
  • Uninsured/Underinsured Property Damage Coverage – pays for car damages if someone hits you and does not have insurance or not enough insurance to cover for car repairs or parts replacement. This can also extend to property damages like your driveway or fences. 

SHOULD YOU BUY UM and UIM?

Your Umbrella Insurance Policy should come with uninsured and underinsured coverage. A number of motorists out there are carrying no insurance at all. As it is, they only have the minimum liability limits to save on premium costs. If you are buying all kinds of policies to avoid financial stress and pay for injuries of the people you are in an accident with, why not buy for yourself and your passengers to protect you from bodily injury and property damage as well?


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ADVANTAGES OF GETTING UMBRELLA INSURANCE WITH UM AND UIM COVERAGE

It is a common misconception that umbrella insurance is just for the wealthy. Many people believe that if you have huge assets, several properties, and expensive possessions, you need more protection. If you are at fault in a car accident and the other driver and passengers all needed medical attention or worse, death, the bills will pile up. They can go after your properties and other assets if you don’t have enough liability insurance.

The benefits of getting extra protection are always advantageous. Here are some more perks that you will enjoy when you purchase an umbrella policy with UM and UIM coverage:

  • It is inexpensive and can protect you against injury and property damage.
  • Moreover, it can increase insurance coverage beyond the limits of your home and auto insurance. 
  • It will provide coverage for legal expenses including defense costs and attorney fees.
  • It will protect you from liabilities that are part of your home insurance such as:
    • False arrest
    • Slander
    • Defamation of Character
    • Wrongful eviction
    • Invasion of Privacy

WHAT ARE NOT PART OF UMBRELLA POLICY?

As with other insurance policies, there are exclusions in the coverage of umbrella insurance:

  • Injury or property damage which is intended by the insured
  • Business or professional activities
  • Illegal activities
  • Loss or damage due to war 
  • Liability incurred through contractual agreements
  • Injuries caused by the use of recreational vehicles

HOW MUCH UMBRELLA INSURANCE DO YOU NEED?

The rule of thumb is you buy enough umbrella insurance that will cover your total assets. Add everything up including your savings and retirement accounts. If it falls below $1,000,000, you can get the minimum which is $1 million as well. If you have more than a million in assets, you can consider a higher umbrella policy. They are sold in $1 million increments. 

It normally costs about $150 to $300 per year for a $1 million coverage. Add a few more dollars for uninsured and underinsured motorist coverage and you will only have to pay about $200 to $400 per year.


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WHO NEEDS UM AND UIM IN AN UMBRELLA POLICY?

If you own a car and drive it frequently, you need UM and UIM coverage. If you like walking or riding a bike, you also need this additional coverage. Other reasons are:

You have a teenager or a new driver in the family

There are a lot of teens and new drivers out on the road every day. The risk of motor vehicle crashes is high among teens 16-19 years old. About 80% of the accidents daily are caused by new and young drivers. This is the reason why you need extra coverage for you and your teen driver for protection. 

You live in a state with a high number of uninsured and underinsured motorists

According to the study by the Insurance Research Council, about one in eight motorists were uninsured in 2019 which is 12.6 percent of motorists. You will never know when you are in the midst of these uninsured and underinsured drivers so it is better to be protected well when you go out on the road.  

You have a high-value car

Having an expensive car means costly repairs. If your car crashes, the at-fault driver may not be able to cover the cost of repair. This is when you need UM and UIM coverage to make sure that your car will return to its original look. 

You cannot afford to pay for expenses associated with a car accident.

UM and UIM coverage will help you get through your injuries. If you sustain injuries in a car accident and the other driver is without insurance or underinsured, and you cannot afford your own medical bills, UM and UIM provide adequate protection. The need for umbrella insurance is clear.


When purchasing a Personal Umbrella Insurance Policy, you have options.

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Conclusion On Umbrella Insurance Policy With Uninsured And Underinsured Coverage Policy

AIS in Denver, CO is a well established insurance agency that can help you with your needs in purchasing Umbrella Insurance. We assure you the best quotes and service.

Call or text our at (720) 221-8168.

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