Most consumers recognize the necessity for auto insurance or insurance for their home. An “umbrella” policy is not as well known, but anyone who owns a home or any assets should consider buying it.
Umbrella liability insurance covers you in many situations if you are held responsible for bodily injury, property damage, or personal injury. The product got its name because it adds a higher level of protection above auto, homeowners and boat policies, which are “primary” policies. Umbrella coverage kicks in after primary insurance is exhausted. In addition, an umbrella policy offers primary coverage for losses not covered by other insurance.
Typically, an umbrella policy is purchased in conjunction with auto and homeowners coverage. You can usually add $1 million-plus of liability insurance for a few hundred dollars per year, and multiple-policy discounts are often available.
(Money saving tip: raise deductibles on auto and homeowners policies, and use the premium savings to pay for umbrella coverage.)
Primary Liability vs. Umbrella CoveragePrimary Liability:Liability insurance under auto and homeowners policies pays expenses (for example, an injured person’s medical care, rehabilitation and lost wages) because the policyholder was at fault for negligent actions. Liability coverage also pays for costs of defending against a claim or lawsuit. It’s common for a driver, vehicle owner, homeowner, or boat operator/owner to be held responsible for someone else’s injuries, property damage, lost wage and/or expenses. An at-fault driver also can be held liable for personal injury (which is distinct from bodily injury), including psychological injury such as “pain and suffering.”
Umbrella Coverage:The umbrella is a shield to protect an individual from having to deplete savings or sell assets to pay a judgment or claim. The umbrella policy keeps the hands of the claimant from the personal, family and business assets of the negligent person. There are a multitude of potential threats that present the potential for financial loss -- dog bites, visitors injured on your property, your tree blowing over onto your neighbor’s house or car, intoxicated drivers leaving your party -- all of these incidents may cause bodily injury, personal injury and loss of wages. These losses might exceed (or be excluded from) primary insurance limits and coverages.
The solution?Most homeowners should consider an umbrella, but especially those that live an active lifestyle. Are you involved in community activities? Do you own a vacation home, a boat, personal watercraft, or motorcycles? Accidents and the resulting lawsuits are always a threat. When homeowners coverage won’t cover it, an umbrella policy can.
If you have any questions regarding umbrella coverage, call one of our insurance professionals.
