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I’m buying auto insurance, what is an umbrella policy?

June 11, 2015 by Steven M. Gursten

Learn what umbrella insurance covers, and why uninsured and underinsured motorist coverage must be included in your umbrella policy

Shopping for car insurance in Michigan can often be tricky. There’s “PIP,” which stands for personal injury protection, and refers to your own No Fault insurance coverage. There is bodily injury protection, which protects someone else if you cause a car accident.

And then there are also several optional coverages that you may or may not need, depending on the age, make and model of your vehicle, as well as where and how often you’re driving it. Collision coverage is a good example.

Today I’d like to review the umbrella policy:

Umbrella Policies are excess liability policies that pay injured auto accident victims over and above what your regular auto, homeowners, business, etc. policies pay. This is an optional coverage.

If you purchase an umbrella policy either through your current auto insurance company or through an umbrella insurer, you must make sure that it includes Uninsured (UM) and Underinsured (UIM) Motorist coverages. UM and UIM is insurance that protects you in case of a crash with a driver who does not have No Fault insurance or has inadequate amounts.

You will be required to carry a minimum level of UM and UIM on your regular auto, homeowners, business policies, etc., before they will give you the umbrella coverage.

If your Declaration Page for the umbrella policy does not include UM and/or UIM coverages, that means you do not have them. Umbrella coverage is usually fairly inexpensive. You can buy it generally in increments of $1 million.

For more tips and information, take a look at our guide to buying auto insurance in Michigan.

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