It can be challenging to determine what an Umbrella Insurance Policy should cost. Many factors go into deciding the policy price tag. However, once you notice the price, it’s even more critical for you to look at the coverage you’re paying for. Umbrella Insurance today costs more than it did a few years ago, and you are likely wondering, “why?”
What Is Umbrella Insurance?
Umbrella Insurance policies were proposed as additional liability coverage for those policyholders who feel they needed more financial protection than their original liability policy could offer. Umbrella Insurance can provide help with additional liability costs that may fall through the cracks of your Home or Auto Insurance policies. The truth is, Umbrella Insurance can offer support to the majority of insurance policies, thus the name: Umbrella.
Always check with your insurance providers to learn and understand the ins and outs of your policy. The professionals at Long and Company, located in Oconomowoc, Wisconsin, can assist you in understanding your policy, as well as your price.
Why Are the Prices of Umbrella Insurance Policies Going Up?
Umbrella Insurance policy prices can vary from company to company but are often relatively affordable. Claims that fall under the $1,000,000 range are easier to predict when compared to more catastrophic damages. Losses that are under that $1,000,000 mark are more comfortable to estimate. Therefore, they usually can calculate average monetary losses, which leads to more affordable premium rates. Umbrella Insurance costs become harder to nail down once you have surpassed that price point. Contributing factors to higher Umbrella Insurance premiums are:
- Attorney Involvement and Increasing Car Accident Claims: Leading insurance agencies have claimed that increased auto accidents, as well as lawyer involvement, have driven up prices. Whenever an attorney becomes involved in a claim, the cost increase is all but inevitable. In 2007, roughly only 30% of liability claims had an attorney involved. As of 2018, the number had gone up to 50%. An attorney’s presence also lessens the payout to the policyholder due to the cost of court proceedings.
- Lawsuit Financing: Recently, lending companies have begun loaning a plaintiff money based on the insurance lawsuit’s value as collateral. This gives money to sustain the case and forces the policyholder to not settle for a smaller payout.
- Reinsurance: Reinsurance is insurance that an insurance company can purchase when they don’t feel confident in carrying a particular policy’s full financial limits. More and more insurance companies purchase Reinsurance due to the frequency of attorneys and courtrooms being involved in liability claims. The cost of that is added on to the Umbrella Insurance policy premium price.
Final Thoughts
Umbrella Insurance policies’ premium costs have increased over the last several years; however, Umbrella Insurance still has essential benefits many policyholders can recognize and appreciate. Speaking with an insurance agent, such as those at Long and Company in Oconomowoc, Wisconsin, can help you better understand your policy and its cost.
How Do I Learn More?
To learn more about the rising costs of Umbrella Insurance, contact Long and Company. Our licensed professionals will be happy to answer any questions you have.
