Most people just buy auto insurance and, once they have the policy, don't think about how they could improve their coverage or rates. But, there is one technique that can help you to lower your overall insurance rates if you treat your insurance holistically.

Many insurance companies provide discounts if you have more than one policy with them. But what you may not know is it can be dependent upon the number and type of policies that you have. Traditionally, you could have homeowner's insurance and auto insurance and get some discount if they are through the same company. But, sometimes you can actually LOWER your overall rate if you add an umbrella policy, especially if you already have low deductibles and higher liability limits.

Why will an insurance agent help you to lower your payments?

Insurance agents are often paid on each policy that they sell, so if they sell you another policy, they get paid for selling that policy even if it lowers your overall insurance payments; in essence, even though a third policy has the net effect of lowering your monthly payments, the insurance agent is paid a commission for selling the new policy.

What does an umbrella policy do?

An umbrella policy is basically like adding extra liability coverage to your home and auto policy. Your normal policies have a cap on what they will cover; an umbrella policy adds additional liability coverage on top of your existing policies

Typically, umbrella policies cover the following:

  • Personal liability beyond the capped amount in your auto or homeowner's policy
  • Coverage if you are sued for libel or slander
  • False arrest
  • Invasion of privacy claims

Can I afford an umbrella policy?

Most umbrella policies are very affordable, the average range for an umbrella policy is between $150 and $300 per year. Of course, this will vary based upon the amount of extra liability that you want to have as coverage – the $150 to $300 range is for $1 million dollars in extra liability coverage.

Who buys umbrella policies?

This is really an easy answer – anyone who needs extra liability. It can be expensive to have low deductibles and high liability on each policy. An umbrella policy is a great way to increase your personal liability without incurring large fee increases for either your auto or insurance policies.

If you look at the statistics, it is typically higher income people who buy umbrella policies. But, that should not be a deterrent if you need the extra coverage.

If you need higher liability coverage but are finding it hard to pay the additional premiums, look at adding an umbrella policy to make up the difference. For just a couple of hundred dollars a year, you can get the extra coverage that you need. For more information, visit sites like