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What is an Umbrella Policy and Why Do I Need One?

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umbrella

Many people get overwhelmed when they think about their insurance. If they own a home, they probably shopped around and went with the cheapest policy. Same with automobile insurance. However, that isn’t always the wisest move.

The truth is that many people are underinsured and it isn’t a good thing. They have a lot to lose if they ever find themselves in an automobile accident or if someone gets injured in their home or yard. For this reason, it is important to really know and understand your policy.

However, even the best policy might not be enough. For this reason, you may want to consider getting an umbrella policy. Here are some questions that you may want to consider if you are thinking about getting a better insurance policy, along with an umbrella policy to further protect yourself.

What Is Umbrella Insurance?

When people think about personal umbrella insurance, they often think of it as extra insurance. It is meant to protect you and your assets from a liability claim.

That being said, umbrella insurance doesn’t take the place of your other insurance. In fact, it only comes into play when you reach your liability limits with your insurance policies, such as your homeowners or automobile.

You should think of it as an additional layer of coverage to your current policies. It doesn’t take the place of them.

What Does Umbrella Insurance Cover?

Bodily injury liability.

Bodily injury liability is the damage that occurs to someone else’s body. If you are at fault for the accident, you could be required to pay for their medical bills. They may also sue you for liability if they are injured and are unable to work or the accident was your fault.

These may include injuries that occur due to an automobile accident or even someone who gets hurt in your home or yard. If your dog bites a child, you may be held responsible. You may also get sued if someone falls off of the trampoline in your yard.

Property damage liability.

This covers the cost of damage or loss to another person’s tangible property. While most people think about an automobile that was in a car accident, you may also be held responsible for the fence that you hit in the accident. Anytime you harm or destroy another person’s property (even if it is an accident), you may be responsible for replacing it.

Landlord liability.

Landlords really need extra umbrella insurance to protect them. They can be sued for many reasons and the insurance will help to protect their investments. If anyone falls and hurts themselves on your property, you may be looking at a lawsuit. The same goes if someone gets bit by a dog that your tenant owns.

If you are a landlord, you really need to consider umbrella insurance so that you can protect your investment (and your business).

Libel or slander.

You could be sued over something that you said (or wrote) about someone.

What doesn’t it cover?

Personal property.

Though your umbrella insurance is supposed to help protect you, it doesn’t cover your own personal property. It does cover expenses that may happen to someone else’s property, which you may be held responsible for.

Business losses.

Unfortunately, personal umbrella policies don’t cover any losses that you may have in your business. This is even true if you run your business out of your own home. You may want to protect your business with a commercial umbrella policy to cover your commercial exposures.

Criminal or intentional actions.

If you are involved in criminal actions, your umbrella policy won’t help you.

Why do I need an Umbrella Insurance Policy?

Umbrella insurance is recommended for many reasons. If you qualify under any of the following, you may want to consider adding to your current insurance policy.

  • Own your own home
  • Have significant savings that you want to protect
  • Have a family that you need to take care of
  • Want to protect yourself against a potential loss of income
  • Are involved in dangerous activities
    • Own a pool or trampoline
    • Own certain breeds of dogs that are often considered dangerous
    • Hunt
    • Participate in sports where injuries often occur
    • Coach a sports team
  • Engage in activities where you may face a lawsuit.
    • Landlord
    • Business owner
    • Serve on the board of a nonprofit
    • Journalist or outspoken person

How does umbrella insurance work?

Umbrella insurance will be there for you if you need it. Let’s say that you were involved in a car accident. By the end of the whole process, you are going to be responsible for three hundred and fifty thousand dollars, both in bodily injury and personal property. Your automobile insurance has a liability of two hundred and fifty thousand dollars, yet you are still responsible for the entire amount. Your umbrella insurance will cover that additional one hundred thousand dollars so that you don’t have to pay that much out of your own pocket.

Just think about it for a moment. Could you really afford to pay hundreds of thousands of dollars if you were involved in an automobile accident?

What if someone got hurt in your home and broke his or her arm? Do you have enough money saved up to pay for the medical bills (over what your homeowner’s insurance will pay)? Do you want to drain your savings account in an instant?

Most people don’t, which is where an umbrella policy could really protect you and your family’s future. A good umbrella policy could bring you peace of mind, no matter what happens.

Are you interested in Umbrella Insurance? Contact us today!

Whether you have good insurance or you are looking around for a better one, don’t hesitate to contact us. We would be glad to talk to you about multiple plans so that you can find the one that works best for you and your family. We will also be able to discuss umbrella plans with you. Together we can decide whether or not you need to add an umbrella plan to your current insurance policy.

Why us? We are dedicated to working with our clients by providing competitive insurance products and highly personalized service. We will help you find the right insurance for all of your needs, at a price that you can afford.

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