My husband carried an umbrella insurance policy but died. Do I still need to keep this coverage?
UPDATED: Jun 24, 2014
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Asked June 24, 2014
To determine whether you still need an umbrella policy, you will need to take a serious look at your insurance needs. An Umbrella liability insurance policy is a special type of broad coverage that works across multiple types of insurance policies. Umbrella policies are designed to cover excess liability claims, and acts as a supplemental coverage rather than a standalone policy.
Umbrella policies are typically purchased in increments of 1 million dollars, but some companies will provide you with custom coverage. If a liability claim is filed, for example, against your homeowner's policy that exceeds the liability limits of the home insurance, your umbrella policy would kick in to cover the remainder of the claim. Without the umbrella policy, you would be responsible for paying the remaining costs out of pocket, and liability claims can be quite substantial.
Umbrella policies are usually purchased by people with quite a bit to lose. Since a claim against you could strip you of your financial worth, property and even dignity if it is large, having an umbrella policy available to cover the needs is usually worth the investment.
Another reason for having an umbrella is if you own several pieces of real estate that is rented out. Buying sufficient liability coverage for each home could prove to be very expensive, but you could buy a regular landlord insurance policy for each property and then use one large umbrella to protect all of your assets together.
Unless the umbrella policy is too expensive to maintain, keeping it in force is probably your best choice. If you are not sure how the policy can benefit you, contact a financial advisor and ask them why your husband might have purchased the policy. You may find out that the policy was purchased for a situation that no longer exists, or you may find out that having the policy is good for your own financial security.
Answered June 24, 2014 by Anonymous