
There are few people who don’t need an umbrella policy. If you own a home, drive a car, have a pet, host guests in your home, or have a new driver in the family, you should not be without this additional layer of liability protection. While many consider umbrella coverage a supplemental policy compared to home, auto, and even life insurance, for many, the safety net provided by this unique type of policy is anything but optional. In this article, we will review everything you need to know about umbrella insurance— from what it is to who it’s for to how much it costs.
What Is Umbrella Coverage?
In the event of a claim or lawsuit for which you are responsible, you may experience financial repercussions if the limits of your auto or home policy are insufficient, including your personal assets being used to satisfy the suit. With an umbrella policy in place, however, if there is a large claim for which you are responsible, your umbrella policy would pay up to those limits.
Typically, these policies extend your liability limits from $1 million to $5-10 million in addition to the liability limit contained in your other personal policies.
Who Needs Umbrella Insurance?
For instance, say a homeowner hosts a Fourth of July party with dozens of invited guests attending. Late in the evening, when fireworks are being fired off by the homeowner and guests, a rocket strikes one of the invited guests. The guest is injured, transported to the hospital, and undergoes extensive medical bills that ultimately exceed the liabilities of the homeowner’s insurance policy. If that homeowner doesn't have a personal umbrella insurance policy – the injured party may try to recoup their financial losses through the personal assets of the homeowner. This would mean that boats, cars, vacation properties, etc. of the homeowner may need to be liquidated to satisfy the obligation. Having a Personal Umbrella Insurance policy in place may help in this situation.
If a situation strikes and you do not have that layer of umbrella coverage to protect you, your wages could be garnished, or you could lose your home. Simply put, you would have to find some way to cover the difference between what your current policy covers and the amount you owe. Your umbrella insurance should be that layer for you.
How Much Does Umbrella Coverage Cost?
What is Not Covered By An Umbrella Policy?
An umbrella policy is additional liability insurance meant to protect you from large liability claims or judgments. It supplements your other policies by providing additional coverage when the liability limits of your auto or homeowners policies have been reached. It also covers things like being sued for slander, libel, or other personal liability situations. Be sure to carefully read all of your insurance policies carefully to understand what may or may not be covered and consult your independent insurance agent to understand your policies and to be sure you have the right coverage for your specific circumstances. Click here to learn more.