How Personal Umbrella Insurance Protects You
Dan Levenson November 10, 2021
Life is full of uncertainties and accidents can happen at any time. A personal umbrella policy can provide an extra layer of coverage to protect what matters most.
Umbrella Insurance Protection
You can add umbrella insurance to an underlying homeowner’s, auto, or boat insurance policy. It generally covers injuries, property damage, and certain lawsuits or liability against you.
The umbrella policy can extend the underlying policy’s liability limits, giving you added liability protection against liability lawsuits. It can also fill in gaps in coverage that might be left by standard insurance policies. Purchasing a higher limits on one or more policies can be expensive and still leave gaps in coverage. A single umbrella policy can help extend your liability protection and fill some of those gaps.
Do You Need Umbrella Insurance?
Nearly everyone can benefit from the protection of an umbrella insurance policy. If you engage in any of these activities or have any of these circumstances, you could possibly benefit from the extra liability protection of an umbrella insurance policy:
- Hosting parties or gatherings in your home
- Owning a car (especially if there are multiple drivers under your insurance)
- Owning a dog
- Owning a swimming pool
These are only a few examples of situations where umbrella insurance can be useful. The takeaway is this– any activity that puts you or the members of your household at greater risk of a liability lawsuit may be a sign that umbrella insurance is right for you.
An Example of How Umbrella Insurance Works
Suppose someone trips and falls at your home and is injured. Your homeowner’s insurance policy has a liability limit of $250,000. The person who visited your home was injured severely and decided to sue you to pay for the expensive medical treatment required. You go to court, and the jury awards the injured party $500,000. You only have $250,000 of liability coverage with your homeowner’s insurance, so the umbrella policy will pay the remaining $250,000,
Without the umbrella coverage in this instance, you would be liable for the extra $250,000 your homeowner’s policy did not cover. Umbrella insurance could potentially save you from financial ruin and losing your home and belongings in a liability lawsuit.
What Is the Cost of Umbrella Insurance?
The cost of umbrella insurance depends on several factors; where you live, how much coverage you need, and how much risk the insurance company considers you to be. The Insurance Information Institute estimates to cost of a personal umbrella insurance policy to range from $150 to $300 per year for $1 million in extra protection – a relatively small premium for increased protection
Umbrella Insurance Exclusions
Not every type of injury or damage is covered by personal umbrella insurance. Here are some things that are typically excluded from coverage:
- Contract breaches
- Injuries to yourself or your family members occurring in your home
- Criminal acts or intentional acts to injure others or cause property damage
- Damages to business property
To be purchase umbrella insurance, you must first have an underlying policy to add liability coverage to it, such as a homeowner’s or auto policy. However, there are a few insurers who offer a standalone umbrella policy.
Life is full of uncertainties. Personal umbrella insurance can give you peace of mind knowing you have the extra liability insurance coverage you need. Contact us for a customized personal umbrella insurance quote today.