Whether it’s a serious car accident involving pricey medical bills or an incident on your property, you can quickly find yourself responsible for damages that exceed the limits on your auto or home insurance policies. With a personal umbrella insurance policy, you can be protected from liability claims with affordable coverage that goes beyond the limits of your home or auto policy.
How Does Umbrella Insurance Work?
An umbrella policy kicks in when your basic liability limits run out to provide additional protection by extending your home or auto policies liability limits by $1M up to $10M. Let’s say you were found at fault in a distracted driver car accident with $850,000 in injuries, but your auto policy only covers $500,000 in liability. Your personal umbrella insurance would then cover the remaining $350,000 – keeping you and your savings safe from paying the costly gap after your auto coverage maxes out.
What Does Umbrella Insurance Cover?
Personal umbrella insurance helps you stay protected and covered in unexpected situations like:
- A guest is seriously injured at your home
- Your teen driver causes a severe crash
- Someone is bitten by your dog
- Major claims or lawsuits
- Damage you cause in a car accident while driving in another country
- Defending you if you’re accused of libel, slander and defamation of character
Who Needs Umbrella Insurance?
Some people are more likely to need an umbrella policy than others. If you engage in some activity that puts you at greater risk of incurring excess liability, you’re an even better candidate for an umbrella policy. Personal liability risk factors include owning property, renting it out, employing household staff, having a trampoline or hot tub, hosting large parties, or being a well-known public figure.
Having a teenage driver in the family also puts you at increased risk, as does owning a dog or owning a home with a swimming pool. Basically, the more likely you are to be sued, the more strongly you should consider purchasing umbrella insurance. But anyone who is risk-averse will sleep better at night knowing they’re protected by an umbrella policy.