Umbrella Insurance Defination
An umbrella insurance policy is additional liability insurance coverage that exceeds the insured’s homeowners, auto, and watercraft insurance limits. It offers those at risk of being prosecuted for damages to other people’s property or injuries caused by an accident an additional layer of protection. In addition, it protects against libel, vandalism, slander, and privacy invasion.
How Does an Umbrella Policy Work?
- Your dog escapes the house and viciously assaults a neighbor out for a stroll.
- Your neighbor files a lawsuit against you for her medical expenses, lost wages, and pain and suffering.
- Your daughter breaks another girl’s nose by punching her during a school altercation. The parents of the lady sue you.
- You cause an accident involving 10 vehicles, but your auto insurance property damage coverage is insufficient to replace all 10 of the victims’ vehicles.
- Neither is your personal liability coverage sufficient to cover their medical expenses.
- You send sandwiches for a field excursion picnic to your son’s school. Several students get food poisoning, and their parents file a lawsuit against you.
- Your adolescent hosts a celebration at your residence while you are away.
- Someone brings alcohol to the gathering, and a visitor is detained on the way home for driving under the influence. You are being prosecuted.
As you may have deduced from the preceding examples, umbrella insurance covers not only the policyholder, but also their family members and household members. Therefore, if your adolescent is not the greatest driver, you can rest easy knowing that your umbrella policy will cover the medical expenses of the injured parties if he or she is found liable for a major accident. That being said, make sure you understand how your policy defines a household member so you’ll actually have the coverage you need.
You may have also observed that, despite the fact that umbrella insurance provides coverage in addition to your homeowners and auto insurance, the incident need not involve your property or vehicle for your umbrella insurance to apply. You are also covered worldwide, with the exception of residences and vehicles you own that are governed by the laws of other countries.
Who needs umbrella insurance?
You are thinking, “I have auto and homeowners insurance that covers some of these situations.” True! However, umbrella insurance protects you beyond the limits of these policies and provides coverage for situations not covered by other policies. Call us today at (866) 272-5192 for a quote on umbrella insurance – the rates are more affordable than you believe!
The bodily injury liability encompasses injuries caused by an accident to a third party. Examples include medical expenses and/or liability claims resulting from injuries caused by:
- A severe automobile collision for which you are at fault
- Harm caused by your companion to others*
- A visitor to your residence collapses.
- A neighbor’s child collapses in your yard while playing.
The property damage liability covers the cost of damage or loss to the tangible property of a third party. Examples include damage to vehicles and other property caused by a car accident for which you are responsible.
The owners of rental properties protect landlords from potential liability. Examples include the price of liability claims resulting from:
- Someone suing you for damages after stumbling over a fissure in the sidewalk of your rental property.
- If your tenant’s dog bites someone, and you are held responsible for the resulting injuries, you will be held liable.
You will also be covered if you are sued for:
- A slander is a harmful verbal statement
- A libel is a harmful written statement
- wrongful arrest, detention, or incarceration
- unlawful prosecution
- Shock/mental suffering
What is not covered by an umbrella policy?
Most of the time, an umbrella protection doesn’t cover:
your injuries or damage to your personal property; a crime or intentional act that hurts someone else; the responsibility you take on in a contract;
Example of an Umbrella Insurance Policy
Think about the following situation to see how umbrella insurance can help. If a driver goes through a red light and hits another car by mistake, there could be a lot of damage to both cars and several people could be hurt.
When the cost of fixing the car is $50,000 and the cost of treating the injuries is over $500,000, the driver who caused the accident may be responsible for costs that are much higher than what their insurance will cover. With an umbrella insurance policy, the extra risk costs that go beyond what your car insurance covers will be paid for.
Do You Need Umbrella Insurance?
Getting umbrella insurance is a choice that is influenced by fear. Many insurance companies say you need it because anyone can sue you for anything and ruin your finances in our lawsuit-happy society.
In the news, there are many scary stories about people who were sued and had to pay multimillion-dollar awards to the people who were sued. But how likely is it that you’ll be in this kind of situation? Do you really need insurance for your umbrella?
Extra Coverage That Protects Your Assets
You may have heard that you should buy umbrella insurance if the total value of your assets, such as bank and savings accounts, retirement and college savings and investment accounts, and home equity, is more than the limits of your car or homeowner’s coverage. The idea behind this piece of advice is that you should have enough liability insurance to cover all of your assets so that you can’t lose them in a case.
But jury decisions can easily go over the limits of an insurance contract. You should really ask yourself, “Am I at risk of being sued?” Since everyone is, umbrella insurance makes sense for everyone in a way. For the extra peace of mind, it’s a small price to pay.
Option for Those With High Risk Potential
Some people are more likely than others to need an insurance cover. You should get an insurance protection if you do something that puts you at a higher risk of having more responsibility than you can handle. Personal responsibility risk factors include buying property, renting it out, hiring home staff, having a pool or hot tub, throwing big parties, or being a well-known public figure.
Having a dog or a swimming pool in your home also puts you at a higher risk, as does having a teen driver in the family. Basically, the more likely it is that you will be charged, the more you should think about getting umbrella insurance. But people who don’t like taking risks will sleep better at night if they have a cover policy.