Choosing an insurance policy can be overwhelming. There are so many types of policies, each with unique benefits and coverage options — you don’t want to tie yourself up with the wrong. It’s so confusing.
One particularly valuable insurance type that can provide you with good coverage and peace of mind is umbrella insurance, though many people don’t know much about it. If that sounds like you, let’s dive in!
What is an umbrella insurance policy?
An umbrella insurance policy, generally designed to cover personal liability, is an extra layer of liability coverage that goes beyond the limits of your existing insurance, such as property insurance or vehicle insurance. It essentially “sits on top” of the primary insurance and extends the coverage further.
Umbrella insurance can also be considered a standalone policy that comes into play when there is no underlying insurance. However, it tends to be more expensive because of its wider scope and higher coverage limits.
Think of it as an “umbrella” that shields you from financial downpours if you’re faced with a lawsuit or a substantial liability claim.
Here’s what umbrella insurance can cover:
- Property Damage Liability: If you or a family member accidentally cause significant damage to someone else’s property, an umbrella policy can cover the costs of repairs or replacements beyond what a standard policy would cover.
- Bodily Injury Liability: If you’re responsible for an accident that causes injuries to others, your umbrella policy can help cover medical expenses, legal fees, and other costs that exceed your primary policy limits.
- Personal Injury Liability: This includes coverage for claims of libel, slander, defamation of character, and invasion of privacy. If you find yourself unintentionally making false statements about someone, resulting in a lawsuit, your umbrella policy can step in to protect you.
- Legal Defense Costs: An umbrella policy can assist in covering any legal defense costs, which can quickly add up in the event of a lawsuit, even if you’re found not liable.
- Global Coverage: Some umbrella policies provide coverage worldwide. So, if you’re traveling abroad, you can still be protected.
- Landlord Liability: If you own rental properties, umbrella insurance can offer coverage in case a tenant (or their guest) is injured on your property, and you’re held liable.
Here’s what umbrella insurance does not cover
There are certain types of claims that are typically not covered by umbrella insurance. Here are some standard exclusions:
- Intentional Criminal or Illegal Activity: If you deliberately cause harm or engage in illegal activities, an umbrella policy will not cover any associated liability, including fines and penalties.
- Contractual Liability: Claims resulting from a written or verbal contract are generally not covered under an umbrella policy.
- War and Terrorism: Damages resulting from acts of war, terrorism, or war-like aggression are typically not covered under umbrella policies.
- Personal Property and Physical Assets: Umbrella insurance is not intended to cover damage or loss to personal property, such as your home, car, computers, jewelry or other physical “things.” Those should be insured separately.
- Environmental Liability: Umbrella policies usually do not cover damages resulting from pollution or other environmental claims.
- Business Activities: Any liability related to business activities or professional services is typically excluded from a personal umbrella policy. As are claims related to employment, like wrongful termination, discrimination, or harassment. A separate commercial umbrella policy would be needed (and we’ll cover that in another blog later this month).
How does umbrella insurance work?
Imagine you’re in a car accident, and the damages exceed your primary auto insurance limits. This is where an umbrella insurance policy steps in.
For instance, if your car insurance policy covers $250,000 in bodily injury and $100,000 in property damage, but the total damages amount to $550,000, an umbrella policy could cover some or all of the remaining $200,000 in the claim.
Without this extra coverage, you’d be left responsible for these excess expenses out of your own pocket. Umbrella insurance is the extra layer of protection that gives you peace of mind and safeguards your assets.
How to open an umbrella policy
Finding the right insurance policy, including an umbrella policy, can feel overwhelming, but don’t worry! You don’t have to go through this alone – a Guided Solutions agent can help.
- We’ll check your coverage: Before suggesting an umbrella policy, we’ll take a good look at your current insurance limits. The umbrella policy kicks in after your main policies hit their limits. In this way, we’ll make sure your base policies are rock solid!
- We’ll evaluate your assets and risks: Let’s talk about your net worth and daily risk level. If you have valuable assets (like a home, savings, or investments) or factors that increase risk (like a pool, pets, or frequent entertaining), we might want to consider higher coverage limits.
- We’ll compare quotes and deductibles: We’ll look for the right coverage at a fair price. And make sure the deductible meets your budget restrictions, as that’s what you’ll pay before the umbrella policy kicks in.
- We’ll present only the best options: We do all the leg work for you, connect you with a wide range of policies, offer honest advice tailored to your unique situation, and provide ongoing support when you need it.
With Guided Solutions on your side, you can rest easy knowing that you’re in good hands. Let’s get you insured!