Let’s say you accidentally injure someone, and it results in $100,000 in medical bills and damages. With a regular liability insurance policy, you may reach your coverage limits and have to pay a large chunk out of your own pocket. An umbrella policy would cover it.
Overall, the purpose of an umbrella policy is to provide an extra-large net of protection, preventing your responsibility for catastrophic financial ruin.
What Is an Umbrella Policy?
You can add an umbrella policy to your auto, homeowners, and/or watercraft insurance policies. With it, your max coverage available for incidents significantly increases. So, anything covered by your original liability policy is expanded.
An umbrella policy will also expand the types of coverage you receive for different incidents. Specific incidents will depend on the policy, but it may include things such as:
- Libel, defamation, or slander
- False arrest, imprisonment, or detention
- Malicious prosecution
- Wrongful eviction or entry
- Invasion of privacy
Umbrella insurance covers liability. This means that it will only cover incidents you are accidentally at fault for, not damage to your personal belongings or business losses—there are other policies for things like that. Also, because it specifically covers accidents, you are not covered for any intentional incidents or contracts you enter into. Umbrella insurance will cover virtually anything you are held liable to in court as well, with the exception of intentional acts and disease.
The purpose of umbrella insurance, then, is to provide extra liability coverage for more incidents than is covered in your typical liability policy.
Who Needs an Umbrella Policy?
Now that you know the purpose of an umbrella policy, you probably wonder what its purpose is for you, i.e., do you need one? The short answer is yes, but not always.
It never hurts to have extra coverage, and depending on your lifestyle, you may need it. Wealthy individuals and families are far more likely to be sued than others. And, the more people you interact with and are potentially responsible for, the higher your chances of being held liable for something. You likely need an umbrella policy if you:
- Have a large public profile
- Serve on a charity board
- Have potentially hazardous items on your property (pools, ponds, trampolines, etc.)
- Own large animals (dogs, horses, etc.)
- Have a household staff
Everyone has some level of risk of being sued. It is up to you to determine if your personal circumstances would benefit from the protection of a policy. But, extra coverage never hurts, and if you are concerned, it is well worth investigating.
Need Advice? Call Secure Insurance Group
We’ll guide you through your insurance options and help you select the policy that suits your needs and budget. To get started, give us a call or email firstname.lastname@example.org.