What Does New Jersey Umbrella Insurance Cover?

Several of your personal policies, like your homeowners and auto insurances, already provide generous coverage for liability. But what happens when you get slapped with a huge, costly, liability issue that exceeds the coverage provided by these policies? Well, that’s where an umbrella policy comes in to cover the rest. The best way to protect yourself against giant liability claims is to learn all about New Jersey umbrella insurance so you can find the right coverage.

What Is New Jersey Umbrella Insurance?

Regardless of where you live, personal umbrella policies essentially stack on top of other kinds of insurances, like homeowners or auto insurance, to extend your liability coverage. Once the underlying policy’s liability limit has been exhausted, umbrella coverage kicks in to cover remaining costs. Though many standard personal policies come with limits in the hundred thousands, personal umbrella policies generally come with limits of $1 million.

What Does New Jersey Umbrella Insurance Cover?

Personal umbrella policies help cover extremely costly liability claims that may result in numerous legal fees or medical expenses. The main coverages umbrella policies stack on top of are homeowners insurance, auto insurance, or watercraft insurance. The two main ways umbrella policies protect you are through:

• Extending your personal liability limits: Insurance companies like to say that umbrella policies “stack on top of” the underlying personal policies to add more liability coverage. For example, if your homeowners insurance policy comes with a $300,000 liability limit and you purchase an umbrella policy with a $1 million limit, you’ve now increased your liability coverage to $1.3 million. So any covered incidents that exceed your old homeowners liability limit are now protected up to that new amount.
• Covering more territory than personal policies: Insurance policies come with “coverage territories.” In other words, areas where your coverage is active. For many standard homeowners, watercraft, and auto policies, these territories are typically the US, Puerto Rico, and Canada. Umbrella policies, however, extend coverage worldwide. So if you end up with causing an accident overseas, your umbrella policy can cover you where your personal policy couldn’t.

Just like an umbrella used to protect you against gloomy natural elements, umbrella policies exist to protect you against a downpour of extensive liability claims.

What Does New Jersey Umbrella Insurance Not Cover?

The thing is, umbrella policies aren’t standard. All insurance companies offer their own unique umbrella coverage, though policies are often similar from carrier to carrier. That being said, if your umbrella policy provides coverage for a claim that your underlying homeowners, auto, or watercraft policy doesn’t, you’re not off the hook from paying out of pocket entirely.

Umbrella policies come with what’s called a “self-insured retention,” or the amount the policyholder must pay if the umbrella policy provides coverage for a loss that the underlying policy it’s stacked on top of doesn’t. So, if your homeowners policy doesn’t cover an incident that your umbrella policy does, you’ll have to pay the self-insured retention amount — typically $1,000 on personal policies — before the umbrella coverage pays the rest.

What Are the Benefits of New Jersey Umbrella Insurance?

The main way that umbrella policies benefit you is by greatly increasing your personal liability coverage limits. However, when looked at more closely, umbrella policies actually come with several benefits, such as:

• Providing coverage for things personal policies don’t: While this isn’t true 100% of the time, in many cases umbrella policies list extra covered perils that your underlying policy doesn’t. For example, your homeowners insurance often won’t cover things like the rental of special vehicles such as jet skis or ATVs, while umbrella policies will.
• Potentially lower out-of-pocket amounts: The self-insured retention amount on umbrella policies is often $1,000. If you have a claim that your underlying policy won’t cover but the umbrella policy will, that’s all you’ll have to pay out of pocket. Personal homeowners, auto, or watercraft policies may come with deductibles that are much higher than that, which of course you’d have to pay out of pocket before receiving reimbursement. Your personal policies’ deductibles are likely to be higher if you opted for cheaper premiums.
• Providing coverage across the globe: Beyond the standard coverage territories included in personal homeowners, auto, and watercraft policies, umbrella policies cover you globally. So you might want to wait to take that risky backpacking cross-country adventure until you’ve got an umbrella policy.

Umbrella policies essentially provide a generous amount of additional coverage on top of your existing coverage, hence their well-deserved name.

How Much Does Umbrella Insurance Cost in New Jersey?

Another draw of umbrella policies is that they’re quite inexpensive for the amount of coverage they provide. Since you’re much less likely to need to dip into your umbrella coverage than you are your homeowners coverage, for example, insurance companies are able to offer policies at a much cheaper rate. For a personal umbrella policy with a $1 million limit, annual premiums are often only a couple hundred dollars, which is almost insanely cheap.

Why Work with a New Jersey Independent Insurance Agent?

In order to get the protection you need and deserve, you’ll want to work with a trusted expert. And who could be better for the job than a local agent who shares your area code? Independent insurance agents act as your own personal insurance shoppers, offering you tons more options than one-policy companies. With just one call, they’ll hook you up with multiple quotes.

New Jersey independent insurance agents are armed with knowledge on what coverage is needed in your area, and they’ll get you set up with just enough of it — not too little, not too much. They’ll handle all the heavy lifting, so you can rest assured you’ll be set up with the right coverage at the right price.

They’re not just there at the beginning either. If disaster strikes, your New Jersey agent will be there to help walk you through the claims process and make sure you’re getting the benefits you're entitled to. Now that’s thinking ahead.