WHAT IS UMBRELLA INSURANCE?
Insurance is essential to protect your assets and family. Personal umbrella insurance provides additional liability coverage that is not available with other insurance policies, such as homeowners or auto insurance.
WHAT IS A PERSONAL UMBRELLA INSURANCE POLICY?
Personal umbrella policies, also known as umbrella insurance, are designed to protect you against large, potentially catastrophic liability claims and judgments. When your underlying liability limits (such a homeowners insurance policy or auto insurance policy), have been met, personal umbrella coverage is available.
WHO HAS UMBRELLA INSURANCE NEEDED?
Nearly anyone can benefit from umbrella insurance. Because accidents that cause high costs can happen to anyone, umbrella insurance can be very beneficial. If you are found guilty, an umbrella policy will protect you from having to pay out-of-pocket for legal or medical bills. Imagine that you are held responsible if a guest gets hurt while playing in your backyard or swimming in your pool. You could also be found responsible for an accident in which another person is hurt. In these situations, an umbrella policy can cover you up to the limit of your policy.
Your umbrella insurance policy typically covers your spouse, children, and any other family members who live in your home, but who don’t have property or auto insurance. Your umbrella insurance policy can help to protect your teenager if they are sued or your spouse is involved in a car accident.
Ask your agent questions about the coverage of people covered by your policy.
PERSONAL UMBRELLA INSURANCE POLICY IN ACTION
A personal umbrella policy is a policy that covers you if you are at fault for an accident that causes injury to another driver. Your regular auto insurance will cover you up to the amount you have selected, such as $250,000. What happens if the limit you selected isn’t enough to pay for the medical bills of another driver?
You may be held legally responsible for any damages that exceed the $250,000 coverage of your car insurance policy. Your personal assets may be at risk if the other driver sues. Imagine if the injured driver was a surgeon or other highly-paid professional. Imagine if the accident that you caused left him unable to do his job for six consecutive months. He suddenly sues you for $1,000,000 to cover the six-months he was away from work.
While your auto policy may cover up to $250,000 in liability coverage, where would you find the $750,000 remaining? An umbrella personal policy can cover additional costs when standard insurance isn’t sufficient. An umbrella policy can provide you with the extra coverage you require so you don’t have to worry about paying the balance. This policy can help you protect your home, bank account and personal property.
Personal umbrella policies can be purchased in increments of one million dollars, ranging from $1 million to $5 millions. Although an umbrella policy is not necessary, it can provide greater protection in the unfortunate case of an accident.
WHAT IS NOT GENERALLY COVERED BY AN UMBRELLA LICY?
Your personal property.
Personal umbrella insurance covers expenses for damage to other people’s property. However, it won’t cover you if you cause damage yourself. Imagine your bathtub burst, causing damage to your home’s drywall. Your damages would not be covered. Your personal umbrella insurance could cover your damages if the water overflows onto the property of your neighbor. This would prevent you from having to pay out of pocket. Important to remember, however, that umbrella insurance benefits will only kick in after the policy limits are exhausted.
Losses for businesses
A personal umbrella policy would not cover losses related to the business operation or damage to business property. Even if the business operates from home, the exclusion applies. If you make money by providing daycare in your home, then any liabilities would not likely be covered.
Personal umbrella insurance doesn’t usually cover other business-related liabilities, such as a malpractice suit or losses related to your paid position in a governing body of a for profit organization.
Intentional or criminal actions
Personal umbrella policies are not designed to protect you against the consequences of your illegal or intentionally harmful behavior. This includes restitution if you are convicted of a crime, or damages you caused by your actions.
Your personal umbrella insurance won’t typically protect you against any liability that may arise from an oral or written contract. It’s unlikely that umbrella insurance will provide protection if you are sued by someone you hired to work on your house.
IS UMBRELLA INSURANCE THE AME AS EXCESSLIABILITY INSURANCE
Although umbrella insurance is sometimes called excess liability protection, these are two types of insurance.
Excess liability coverage is not offered by all insurers. These policies do not cover the same risks as the underlying policy, and have the same exclusions. Excess liability coverage in homeowners insurance policies will likely provide additional protection for you if you are held responsible for injuries sustained by visitors to your home. You would likely not be covered for a defamation or libel settlement because it is not covered by the standard homeowners insurance.
A personal umbrella policy provides additional protection and liability coverage in addition to protecting against other risks. An umbrella policy can pay for a libel against you or a slander judgement against you. Standard homeowners liability coverage will probably not, even though you have excess coverage.
An local agent will answer your questions regarding personal umbrella policies. This will allow you to decide if additional liability coverage is right for you.