Blog

Umbrella Insurance and the Advantages of Packaging Your Policies

Insurance rates tend to fluctuate significantly from year to year. And if you have not shopped around for rates in a while, now is a great time to take a look at your auto, home, and life insurance policies and find out what options are available for you. You might just find that you have been overpaying for your umbrella insurance coverage. Umbrella Insurance

Why Do People Overpay for Insurance: Insurance is a product that is not particularly exciting for most people. It is one of those “necessary evils” that they know they need, but would rather not think too much about it. For many consumers, their first experience with insurance comes when they get their driver’s license, at which time they are typically placed under their parents’ auto policy. When they go on their own, they tend to stay with the same insurance company and agent, because they are already familiar with them.

Later on when it comes time to buy a home, they need homeowner’s insurance. This is often purchased through a recommendation from a real estate agent or mortgage broker. Then once they start a family, they purchase life insurance through their employer or another provider. Often, the end result is three insurance policies purchased through two or three different carriers.

The Advantages of Bundling: Many consumers do not realize that they can potentially save a significant amount of money by bundling their insurance policies with one carrier. Many insurance companies offer multi-line discounts if you have two or three of your policies under one roof, and this savings can add up over time. You may wonder why companies tend to offer such a good discount for bundling, and what the catch is. Insurance carriers have strong incentive to offer you a multi-line discount for a couple reasons:

– When insurance companies are collecting more premiums from the same customer, they save money by not having to add as much additional staff to manage these bundled policies. This allows them to pass a good portion of that savings along to you.

– Insurance companies know statistically that consumers who have two or more policies with them are far less likely to switch to another carrier. And the more customers they can retain, the more stable their business becomes.

It Adds Another Layer of Protection with Umbrella Insurance: After you review and update your current insurance policies, you may want to consider applying some of the money you save toward an umbrella policy. Umbrella insurance is for those who need extra protection beyond the liability limits of their present auto and homeowner policies. For example, if you have $500,000 in liability coverage on your homeowner policy, a $1 million umbrella policy would give you a total coverage amount of $1.5 million. If you have a significant amount of assets you want to protect, umbrella insurance is definitely something you should consider. As for cost, umbrella policies are fairly inexpensive; the average rate for a $1 million umbrella policy is less than $400 per year.

Insurance rates change frequently, and it is always a good idea to shop around regularly to ensure you are getting the best deal. If it has been more than three years since you heard from your current agent, it might be time for a change, especially if your agent is captive to one particular insurance company. A better option may be to speak with an independent insurance agent. Independent agents work with several of the top insurers in your state, and they are able to take an objective look at your specific circumstances and bundle your coverage with the insurance carrier that most effectively addresses your needs and budget.