The average cost of car insurance increases by $872 per year after an at-fault accident, according to U.S. News & World Report. That’s costly, and more than enough reason to shop around for a new policy.
Money Talks Newsletter subscriber Suresh V. is experiencing that firsthand, and so asked Money Talks News:
“I am looking for auto, home and umbrella insurances. My present insurance (all from Allstate) went up due to an accident. Another insurance company gave me a better rate on auto. But their umbrella insurance is way high.
Can I stay with the present insurance for home and umbrella and get auto insurance from a new insurance company? The present insurance company may increase home and umbrella insurance costs because of some discounts vanishing.
What problems might I have with two different insurance packages, especially with umbrella insurance?
What is umbrella insurance?
Money Talks News founder and certified public accountant Stacy Johnson has answers. Before we get into it, though, let’s define umbrella insurance for those who might not know.
Umbrella insurance is extra liability protection that sits on top of your existing policies, like auto and homeowners.
If you’re found responsible for injuries or property damage and the claim is bigger than the liability limits on your base policies, the umbrella policy can help cover the difference, including legal defense fees in many cases.
The trouble with umbrella insurance
Many umbrella policies require your underlying auto and home policies to be with the same company or, at minimum, meet specific liability limits that the umbrella policy provider can easily verify. This makes splitting coverage across multiple insurers harder.
“A lot of umbrella policies require underlying auto coverage to meet minimum limits, and it’s hard for them to know that if it’s with another company,” Stacy says.
Not to mention that Suresh stands to lose any bundling discount, which Stacy says can be up to 25%.
In other words, even if a company is willing to let you split, you could end up paying more for homeowners and umbrella insurance once discounts disappear. Plus, you still have to satisfy the umbrella provider’s liability requirements.
Stacy also warns that approval isn’t guaranteed when coverage is scattered across multiple companies.
“The new umbrella insurance company may not even accept you at all. That’s what happened to me, actually. I tried to do that, but I had my motorcycle insurance elsewhere, and they wouldn’t let me do it,” he says. “You might as well just bundle everything and leave it where it is.”
For more on Stacy’s take, check out his video about umbrella insurance.
Bottom line: Get quotes for both situations — one company handling all three policies, and a split set-up. Then compare the total annual cost and coverage. But understand that bundling everything with one reliable insurer may end up being simpler, safer and cheaper.
Read the full article here
