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Umbrella requirements and possible dangers.
An Umbrella policy does not cover small lawsuits. That is why your Personal Auto Insurance needs to meet Umbrella requirements.
You must raise your primary liability limits to certain minimums and guarantee that you’ll maintain them. If you violate, you will be personally liable for the difference between what your coverage was supposed to be (what you’ve guaranteed) and what it is. For example, minimum auto liability coverage was supposed to be $100,000, but you’ve changed it to $50,000. In that case insurance company would pay $50,000 and you would owe $50,000 out of your pocket, because the guarantee of having $100,000 of coverage, which was needed to get the Umbrella, was broken.
Now, make sure you, actually, pay your bills, so there won’t be any cancellation of your car insurance. Otherwise you’ll be responsible for a lot of money in case of an accident.
And don’t just toss your mail away. Read all notices from the Umbrella insurer carefully. They might need you to raise the primary coverage limits. Otherwise, you’ll be responsible for the gap. Trust me, “I didn’t see the notice” will not work.
To avoid both is very easy:
- First, set up an automatic, electronic, monthly payments from your checking account ( I might be, what I call from “stone age”, because for any money deposits I still go to the teller instead of dropping the envelope with my money into one of those “booth things”, but I surely do have all my bills paid automatically, so I do not have to worry about forgetting to do it).
- And, second, buy your Umbrella policy from the same insurance company as your primary policies and through the same agent, so he will contact you with any Umbrella requirement changes. And, if he would not and you will get in troubles, you can have some recourse against the agent or car insurance company.
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