Auto Insurance Diary

Imagine that your child is responsible for an auto accident resulting in damage to other people and property. To a large extent that is not within your control. You have of course made certain that he is covered by insurance. That is the law of the land.

However it is impossible to know in advance the actual extent of the claim that may be made, and you could be in the position of having used up your standard insurance policy limit without having paid for the whole of a justified claim. The other party may suffer serious injuries, and it is bad enough to know that one has caused injury, without the guilt of being unable to compensate the victim of the accident adequately for the expense that will cause.

An economical way of protecting yourself against such a personal claim against your family, which could have disastrous results, is to take out an umbrella policy. The cost per unit of this sort of cover is less than it would be for a standard policy: that is because the likelihood of a claim is lower, this not being the main cover against liability. You first need to use up the cover provided by the principal policy and it is only afterwards that you can seek protection from the umbrella policy.

Umbrella policies are designed not only to top up the limit on your normal cover but also to fill in some of the gaps that may exist in your cover. If you have purchased such a policy, you are far less likely to find yourself unprotected.. The purpose of these policies, is to provide the insured person with greater peace of mind at a better cost than a first insurance could. Of course it is impossible to be insured against every possible risk, and umbrella policies themselves will have their limitations, so as for every other type of policy, one should check carefully on the conditions applicable, and if possible take professional advice.

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