Protecting your hard-earned assets is an important part of planning for your future. There’s nothing like working to save and set aside money for the future, only to have it taken away through a liability lawsuit.
There are many causes of liability, from a slip-and-fall on your property to a car accident. In today’s world, people will sue over anything. They’ll even file a lawsuit against their friends!
Are you protected? If you don’t have umbrella policy coverage, the answer might be “not as well as you could be.” An umbrella policy covers you above and beyond your current insurance.
Curious if a personal umbrella policy would cover your entire family, and what kinds of protection it can offer? Here’s what you need to know.
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Is My Entire Family Covered by My Personal Umbrella Policy?
Each insurance contract is different, and it’s essential to read the details of your specific policy. However, an umbrella policy generally covers you and the members of your household if you are found liable for a covered incident.
However, those in your household who have their own insurance policies may not be included. For instance, an adult child with their own auto policy may want their own umbrella policy as well.
If you have someone in your household, specifically excluded from your insurance coverage, your umbrella insurance would likely not apply to any excluded activities. For instance, if you have an accident-prone household member who is excluded from your auto policy, an auto accident they are involved in will generally not be covered by your insurance umbrella policy.
Make sure you speak to your insurance agency about who exactly would be covered in various scenarios for your umbrella policy. Encourage adults in your household who maintain separate insurance coverage to obtain their own umbrella coverage as well!
What Does a Personal Umbrella Policy for the Entire Family Cover?
What is an umbrella policy? There are two aspects to it. The first is coverage over and above your existing home and auto insurance, and the second is additional liability coverage.
Coverage Above Home and Auto Insurance
Wondering what is covered under an umbrella insurance policy? The insurance is designed for any covered incident where you are found liable for another person’s damage or injury in large amounts. You sometimes see awards in court for hundreds of thousands of dollars — an umbrella policy would help you cover that so you don’t lose your personal assets in a lawsuit.
An umbrella goes over and above your existing auto and homeowner’s coverage. You have to have both types of underlying insurance to qualify for an umbrella. Often, you need to meet minimum coverage requirements as well.
If a covered incident happens and you’re found liable, your underlying coverage pays out first, up to the limit. If the damages exceed the home or auto policy, then the umbrella coverage kicks in.
Another critical aspect of umbrella coverage is that it covers your legal defense as well. If you’re sued for a large amount of money, paying for court costs alone could be a major financial challenge. Personal umbrella liability insurance would take care of that for you.
Additional Liability Coverage
Another answer to the question, “Why do I need an umbrella policy?” has to do with the additional liability coverage it provides. This type of insurance can be hard to find anywhere else.
For instance, if you rent a boat on vacation and cause damage or injury to someone, that wouldn’t be covered under home or auto. However, the liability would be part of your umbrella policy coverage.
It also provides legal defense and coverage if you’re sued for libel or slander. If you talk poorly about someone, either in print or verbally, you can be sued for damages. Even proving you told the truth can be expensive.
As you can see, an umbrella policy can protect you in a variety of circumstances!
Why Do I Need a Personal Umbrella Policy for the Entire Family?
Why is it important that your umbrella policy coverage covers the entire family? Because sometimes, people make mistakes! You want to ensure that your finances are protected if there’s ever a lawsuit due to someone’s actions in your household.
For example, if your teenage child causes a multi-vehicle accident, costs could easily skyrocket. Not only do you have to think about the damage to other cars, but injuries are very expensive. If someone should die, your liability could easily be over a million dollars.
Your personal auto insurance may have a high enough limit to cover some of the damage, but it may not cover it all. That’s where an umbrella policy makes a difference.
Another example is if your dog bites a guest in your home. Animals can be unpredictable, and if your pet injures someone, the visitor may sue you. As with car accidents, the actual medical costs are only part of the picture. Missed work, mental distress, and other factors may be involved. The average cost of a dog bite payout in 2019 was $44,760, but some can be much higher.
In some states, you can even be sued if your dog bites an intruder. Having umbrella insurance helps you protect yourself.
What if your school-aged child lies on social media? You can be held liable for any economic damages they cause. A lie can cause a loss of customers, reputation, and revenue. The business could sue your family, and to get legal defense and appropriate coverage, you’d need an umbrella policy.
Another common occurrence is if your spouse is chaperoning a trip. School and civic groups often ask for volunteers to help ensure children follow the rules and stay safe. But what if a child is injured?
In that case, your spouse could be sued by the parents of the other party. Even if your spouse isn’t liable, you’ll have to defend yourself legally. That’s where an umbrella policy can help.
If your spouse is found liable for negligence or some other concern, the damages can be substantial. Serious injury to a child is often compensated by payments that consider what they could have been and what they might have done if uninjured.
Another example would be if your teenage driver caused a major accident. Even hitting a single car can cause significant property damage and injure another person. Because the teen is your child, you would be liable for their actions.
As a result, having an umbrella policy can be an important way to protect yourself if something goes wrong.
How Much Personal Umbrella Coverage Do I Need?
Now that you know the answer to “What is a personal umbrella policy?” it’s time to think about how much coverage you may need. Answering, “How much umbrella insurance should I carry” can be challenging.
A lot of the answer has to do with your personal assets. If you have a lot to protect, you want a lot in coverage. However, just because you don’t have many assets doesn’t mean you should keep your umbrella policy low.
It’s vital to think about the costs of liability lawsuits and how likely you are to get sued. If you have a dog, a pool, or children, your liability is higher. Kids can do crazy things, and other parents aren’t opposed to suing.
The minimum level of coverage is $1 million for an umbrella policy. You can go higher as well, such as $5 million or even $10 million.
Considering that the average payout if someone is killed in an auto accident is over $1 million, these numbers are not unreasonable. The good news is that the cost of umbrella insurance is not as high as you might expect. You can get a $2, $3, or $5 million policy very affordably.
Get the Umbrella Policy Coverage You Need Today
Do I need an umbrella insurance policy? Yes, you do! Almost everyone has liability risk, and in today’s litigious society, you can be sued for nearly anything.
There’s no reason your assets — however large or small they are — should be at risk due to liability. Umbrella policy coverage is less expensive than you might expect and can give you significant peace of mind.
An umbrella policy not only helps pay for liability, but it provides legal defense as well. Knowing that you will be protected even if a lawsuit is frivolous helps calm your mind as well. There are a lot of reasons to purchase this type of coverage.
Are you ready to get started with an umbrella policy? We’d love to help. Contact us for a quote today!