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Paul Kiesel
Paul Kiesel
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Auto Accident Excess Insurance Coverage

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Automobile excess or umbrella coverage is important to have when you’re in an auto accident or involved in a car crash.

In keeping with my insurance theme of two weeks ago, I want to urge you to consider purchasing an excess insurance policy, also known as an "umbrella" policy. Here’s how these policies work: Let’s assume your underlying liability insurance policy for any auto accident is $100,000. An "umbrella" or excess policy only kicks in only if your liability (i.e.: what you owe the other person) for an auto accident exceeds the amount of your underlying policy (in this example, $100,000). If the damages the other person suffered exceed the underlying policy limit, then the umbrella policy pays damages above that amount. This protects your family’s assets from the injured party. What most people don’t know, or don’t realize, is that the cost of excess coverage is VERY reasonable. Depending on your auto insurance company, a $1,000,000 excess coverage policy could be as little as $75.00 per year. Imagine the peace of mind of having a one million dollar umbrella policy for less than $100 per year!

While sometimes offered as a rider, an umbrella insurance policy is often sold as a stand-alone policy. Most insurers who offer this coverage require increased liability limits under existing homeowner’s or renter’s and automobile insurance policies before offering this coverage.

An umbrella policy provides liability coverage over-and-above the coverage provided under your homeowner’s, renter’s or automobile insurance. This is commonly referred to as "second-tier" or "second layer" insurance, since coverage kicks in only after you exhaust other coverage (provided by the first-tier — your homeowner’s or renter’s or automobile insurance). Second-tier policies save you money in the long run. They have a lower premium because a large majority of incidents will be covered by your first-tier coverage.

The bottom line is that for a relatively small amount of money, you can buy significant peace of mind. This coverage can protect your family’s assets if you are sued by someone you injured in an auto or other accident. In the words of Sy Sims (from the old Sims clothing stores) "an educated consumer is our best customer." Familiarize yourself with your auto insurance policy before you have an automobile accident — you will be happy you did.