A Basic Guide to Umbrella Insurance: What You Need to Know

Accidents can happen at any moment. Sometimes a split-second decision can impact your future. If you are at risk of being sued, you could lose everything if you don’t have enough protection. Umbrella insurance can protect you from such sudden unfortunate events. This guide will help you figure out if umbrella insurance is necessary for you.

What Is Umbrella Insurance?

Umbrella insurance is personal liability coverage designed to protect you from losing your assets if you are liable for a claim substantially higher than your policy limit. Umbrella insurance takes over once you have reached your policy limit. Umbrella insurance covers liability claims such as slander and libel. The goal is to ensure that you are covered in any situation if a potential lawsuit arises.

How Umbrella Insurance Protects You 

Umbrella insurance is extremely versatile. If you are a pet owner, umbrella insurance covers you if your pet attacks and injures someone. That way, you won’t be responsible for covering the injured party’s medical bills and lost wages out of your own pocket. Perhaps you are hosting a party and someone gets injured or you are held liable for a serious auto accident. These are common situations where your liability coverage may not be enough to fully cover you. Umbrella insurance adds an extra layer of protection in these kinds of situations.

Umbrella insurance also covers your family. For instance, your teenage driver might get involved in an accident for which they are held liable. If your child causes significant damage, the umbrella insurance policy will cover the costs of medical bills or repairs that exceed the limits defined by your auto insurance policy.

Is Umbrella Insurance Necessary?

When researching umbrella insurance, you must carefully evaluate the risks involved. Nowadays, lawsuits occur more frequently than ever before and it’s important to have protection. An important way to decide if you need umbrella insurance is by analyzing the total value of your assets. Take stock of your savings accounts and your investments. If the total value of your assets is higher than your policy’s liability limits, you should consider adding umbrella insurance. You should have enough liability coverage so that your assets are not at risk if you are sued.

It’s important to also consider the likelihood of being sued. Your profession, hobbies, or accessories may increase your likelihood of being sued. If you work in a profession or enjoy participating in high-risk activities, you may be sued at some point. If you enjoy skydiving or host large parties or have a swimming pool, jacuzzi, or trampoline at your home, you should strongly consider umbrella insurance. All it takes is one bad bounce on a trampoline or a slip as someone is getting out of the pool to cause a serious injury. Umbrella insurance allows you to cover any medical costs that your standard homeowners/ auto insurance policy might not cover, and will also cover litigation costs if you are sued by the person who was injured.

Cost of an Umbrella Insurance Policy 

The cost of an umbrella insurance policy depends on multiple factors including the amount of coverage you need, the state where you reside, and the amount of risk involved in insuring you. The more assets you have, the more costly it may be to insure you. Generally, umbrella insurance is relatively inexpensive compared to other types of policies. You can find a policy with $1 million in coverage that cost an average of $200 per year. The policies are relatively inexpensive because they are meant to cover you over and above your standard home and auto liability coverage. In order to qualify for umbrella insurance, you should have the maximum amount of liability coverage on your existing policies.

As an alternative, you can consider purchasing endorsements. Adding endorsements to your home and auto insurance helps increase the liability limits. You can also inquire about a bundling discount. This allows you to get a good deal on umbrella coverage because you are using the same insurer for your home and auto coverage as well. Your premiums may be slightly higher, but the overall discount and the ease of having multiple coverages from a single provider will be worth it.

Possible Exemptions 

While umbrella insurance policies are versatile, there are a few areas where you may have a gap in coverage. If you are held liable for a business-related incident, you will not be covered. You are also unable to use coverage if you are liable based on a contract that you signed.

Even if you live a careful lifestyle, accidents can occur at any time and you can still be sued. Umbrella insurance extends beyond your standard coverage and protects you from losing your assets to such unfortunate incidents. If you have more questions about umbrella insurance, contact our experts at Burton A. Harris Insurance Agency. Serving clients all across California, we are here to assist you today!