A personal liability umbrella policy is an additional insurance plan you can purchase. It is supplemental and doesn’t stand alone as an insurance package. Instead, it protects you against expenses that your homeowners or auto insurance policies don’t cover.
This includes damages beyond the maximum your other coverage will pay. It also covers some situations that don’t fall under a standard policy, such as the expense of a lawsuit.
Don’t leave your financial security to chance. Find out about the options available to you and get a free quote from Lake Region Insurance Agency today.
Why Would I Need an Umbrella Policy?
Umbrella insurance coverage starts where your other policies end. It can protect you if a car accident or other incident creates damage that outpaces what your plan covers. Expenses can stack up quickly and leave you buried in debt if you don’t have adequate insurance.
Here is a sample scenario:
You are on your way home from the airport. It starts to rain, and then it turns to freezing rain. You try to find a safe place to park, but your car slides and swipes three vehicles. Naturally, one of them is a Lamborghini.
Luckily, you have auto insurance, right?
In most situations, your auto insurance is going to do a great job of covering you. Your run-of-the-mill fender benders typically don’t rack up astronomical damages. But every policy has limits.
While it might seem impossible to do hundreds of thousands of dollars in damage, it actually isn’t that hard. Depending on the value of items and vehicles damaged, or if there are injuries, one accident can put you over the limit.
If your auto insurance has a $300,000 limit, but you’re held responsible for $500,000 worth of damage, you are accountable for the other $200,000. That amount will sink most people, and you could end up losing your assets.
Now, let’s run that again with an umbrella policy in place:
The weather is awful. You lose traction and slide into the parked vehicles, including the Lamborghini.
Your auto insurance kicks in to cover the damage, and you pay your deductible. The insurance company pays out $300,000, and your umbrella policy picks up the rest.
This scenario helps you protect your life savings because you don’t have a judgment hanging over you. You can move on with your life.
A personal liability umbrella policy also helps protect you in the case of a lawsuit. For example, if someone falls on your steps and sustains an injury, they might sue you. If your dog gets in a fight with the neighbor’s dog or bites the neighbor, they could bring charges.
Umbrella insurance can pay the medical bills of the person who fell down your steps. It can compensate your neighbor for his dog’s lost show earnings. And it can help you protect your personal assets in the case of a judgment against you.
I’m Not a Millionaire. Do I Really Need More Insurance?
Many people go their whole lives without filing a homeowner’s insurance claim, having a severe accident, or getting sued. Others figure that if they don’t have considerable assets, they don’t need to worry about lawsuits.
Yes, the chances of being named in a suit are relatively small. But the financial consequences can be devastating.
Here are a few things to consider:
- No matter the size of your life’s savings, it could be wiped out if you lose a lawsuit.
- Even if you win the legal battle, you may be responsible for fees to defend yourself. Legal defense costs can run into the tens of thousands of dollars or more.
- If you have no assets currently, the court can still attach a judgment to your future earnings.
- Personal liability umbrella insurance can cover unusual circumstances that you would not typically carry coverage for, such as renting a jet ski.
- Umbrella insurance covers libel and slander.
There are plenty of situations that may increase your risk of being named in a lawsuit. For example, you and your assets may be at higher risk if you:
- Own a rental property
- Coach a children’s sports team
- Volunteer at a nonprofit
- Participate in contact sports
- Own particular breeds of dog
- Own a trampoline or swimming pool
- Have significant assets
- Have high potential earnings – Liability judgments can attach to future income.
What Doesn’t Umbrella Insurance Cover?
Umbrella policies cover your liability. That means they pay the cost of other people’s losses if you are responsible for it.
But they don’t cover your losses. For example, if a burst pipe floods your apartment, an umbrella policy won’t pay for damage to your things. But if the water ruins your downstairs neighbor’s items, an umbrella policy can kick in.
Your umbrella policy will not come into play until after your homeowners or auto insurance pays. It also won’t eliminate your deductible on those policies.
This plan also won’t pay out for damage you cause intentionally. If you throw a brick through your neighbor’s window, the repercussions of that will be yours alone. Your homeowner’ insurance will also refuse to pay in this type of circumstance.
A personal umbrella liability policy also excludes any liability you incur performing business or professional activities. You need a business liability policy to meet that need.
How Much Insurance Do I Need?
Just as with any insurance decision, there is no one-size-fits-all personal umbrella insurance plan. You will need to work with your independent broker to determine the best extra liability coverage for you. By looking at your budget and total assets, your agent can help you settle on an appropriate amount of coverage.
Talk to Lake Region About a Personal Liability Umbrella Policy
This type of insurance plan is an inexpensive way to give yourself a sense of security. You can feel confident and prepared for almost any liability circumstance. Contact Lake Region Insurance Agency today and find out how you can have this peace of mind.