Saving Money by Reducing Your Liability Coverage

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Are You Thinking of Reducing Your Liability Coverage?

Don't Do It If You Have Umbrella Insurance Coverage!

You may be thinking of saving money by reducing your liability insurance, but this could get you in a lot of trouble if you have umbrella insurance.

Insurance brokers and salespeople like to sell umbrella insurance which is a separate insurance policy offering $1 million or more insurance coverage and if you purchased one, you cannot reduce your "regular" liability coverage.

All umbrella insurance policies require a minimum amount of underlying liability insurance. Some umbrella insurance policies require that you maintain a minimum underlying liability insurance policy of $100,000 and some require $300,000.

Occasionally, someone will have a "regular" liability insurance policy of $100,000 or more, purchase an umbrella insurance policy and later reduce the liability insurance policy to the New York State minimum of $25,000 to save money.

The problem is the gap created between the $25,000 minimum coverage and the minimum of $100,000 or $300,000 required by the umbrella insurance policy. You may find yourself responsible for the difference in the event that you are negligent in causing an accident and seriously hurt someone.

Where the injured person has an injury worth enough to recover from the umbrella insurance policy, a lawyer representing the injured person will not be able to settle for the $25,000 minimum coverage and will have to seek compensation from the umbrella insurance policy. This will mean that you will be responsible for the difference.

This is why it is so important for a lawyer to know how to search for umbrella insurance and to conduct a search even when the person causing the accident only has a $25,000 insurance policy. Some lawyers mistakenly assume that if there is a $25,000 insurance policy, there cannot be umbrella insurance.

Remember, never reduce your auto liability insurance when you have an umbrella insurance policy.