Did you know that there is a smart way of reducing your cost while you increase your coverage at the same time? Have you heard of an umbrella policy? This policy is really a life saver for those who know how to take advantage of it. This article is all about learning to take advantage of this policy to both improve the quality of coverage you enjoy and lower the premiums you pay for your auto and home insurance policies.

Every auto and home insurance policy has a liability part. In order to keep things simple, we’ll restrict ourselves to how to do this on your auto insurance policy. Once you understand the basic principle, you can use it for any other policy that it can work with…

Reduce your Bodily injury liability coverage to the very minimum required by your state law and buy an umbrella policy instead. The more substantial your assest, the more this recommendation is true in your case. What do you buy bodily injury liability coverage for? It’s to take care of passengers involved in an accident along with the other driver. It protects your assets from lawsuits.

The logic behind this advice is that no matter how extensive the liability coverage you buy with your auto insurance is you could still easily be in deep trouble if you are at fault in an accident that injures people badly. If your liability coverage can’t take care of their medical bills and damages awarded against you, you could lose all your assets, life savings and even your home. An umbrella policy, on the other hand, will certainly be adequate to cover even the craziest of lawsuits.

Although we are using an auto policy in this example, it is important to point out that the umbrella policy you purchase is valid for liability issues that have nothing to do with your car or driving. Price-wise, you get much more coverage per premium dollar with an umbrella policy…

If a 35-year old man who lives in New York City wants to raise his bodily injury to $100K/$300K from $25K/$50K, his rate will increase by $300! Can you compare that to the fact that he will easily get $1 million coverage on an umbrella policy for less than that amount. And if he chooses to raise the coverage amount of his umbrella policy to $2 million, he’ll only have to pay $75 more.

If you intend to buy more coverage it will cost you only $50 per million thereafter (This is based on a report by the Insurance Information Institute). If you want more for less then an umbrella policy will do you more good.

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