What is personal umbrella liability insurance and why should you consider it?

Umbrella insurance provides additional coverage.

You know how important it is to be insured. You have home insurance and car insurance. You’re happy with your coverage and your premiums. But have you ever considered if your limits of coverage on those liability policies are enough? What if there comes a day when you have a claim that blows those limits out of the water? That’s when you’d need a personal umbrella insurance policy.

What’s an umbrella policy?

Indulge us for a moment in a corny analogy.

Picture your home insurance (for example) as a raincoat. You wear it to protect you from any surprise rainstorms that could happen, so you’re covered. But what if it starts to pour all of a sudden and you’re trapped in a rainstorm that’s heavier than any you’ve ever experienced? Your raincoat might not be enough to keep you dry, and that’s why you’d want an umbrella to go along with it. It’s an added layer of protection against the unforeseen storm.

Okay, corny analogies aside, let’s give an example.

You host a neighborhood get-together at your place. You’re looking forward to it. You invite your guests for a good, old-fashioned barbecue and fire up the grill, employing all your grill safety skills. Everyone’s having a great time until one of your neighbors trips on an uneven board on the deck and falls into someone. They both go tumbling down the stairs and onto the concrete patio below. They’re both badly hurt, and they press charges.

You’re found responsible, so you’re now looking at medical costs and either a jury-determined award for damages and pain and suffering or an out-of-court settlement. The expenses quickly rise above what the liability portion of your homeowners policy will cover. The situation isn’t good. It means that your personal assets are at stake, including your wages.

Umbrella insurance can protect you against big losses.

What would umbrella insurance do?

Umbrella insurance kicks in where your standard policy (homeowners, auto, boat, etc.) left off. Instead of you having to cover all of the expenses from that lawsuit, your umbrella insurance would take care of it. You’d be protected. Don’t underestimate how expensive court costs and liability situations can be – the costs can skyrocket into the millions. Your umbrella insurance is there to take the fall for you. It fills the gaps in your coverage.

In the case of the falling neighbors, your homeowners liability would cover expenses up to its limit, and then the umbrella policy would take care of the rest (up to its limit.)

How much umbrella insurance do you need?

To determine how much umbrella insurance is right for you, you have to consider your assets and your risks. For example, do you have a teenaged driver? Have a dog that could bite someone? Have a pool? (By the way, dogs and home insurance don’t always get along. Umbrella policies can help dog owners mitigate their risk.)  Basically, think of things that could put you on the receiving end of a lawsuit – in other words, personal risks that you face in your day-to-day life.

Keep in mind that umbrella policy limits start at $1 million and go up to $5 million.

How much does umbrella insurance cost?

When you think about how much extra coverage umbrella provides, the extra cost to your premium is very reasonable.

Two factors that contribute to the cost are:

  • The value of the policy (premiums will usually go up by about $50 or $75 for each million)
  • Your personal risk factors. For example, do you have driving tickets on your record? What does your credit score look like? (Yes, your credit score has an effect on your insurance.) The cleaner your record, the less of a risk you are to an insurance company.

Pro tip: To save money on your umbrella policy by possibly getting a discount, get your umbrella policy from the same company that writes your standard policies.

Get peace of mind with umbrella insurance.

Even though homeowners and auto insurance provide a certain level of liability protection, there are many disastrous situations that might completely exceed the coverage you currently have. Imagine the unimaginable. Would your current policy be enough to cover all the expenses? Or would you be left to foot a hefty portion of the bill? An umbrella policy will protect you from a major loss.

If you’re interested in getting a personal umbrella insurance policy, let us know! Just fill out our quote form or give us a call today and we’ll be happy to help you with any of your insurance needs. We want you to be able to enjoy peace of mind knowing that you’re protected from any big disasters that come your way.