Have you ever had a party? Has your dog ever gotten off the leash? Have you ever gotten in a fender bender? If so, you could easily be the target of a lawsuit. That’s why you may need a Personal Umbrella Insurance Policy (PUP) or “excess liability insurance.”
Umbrella insurance policies provide extra liability coverage beyond a typical liability coverage policy, and can cover losses beyond normal policy limits.
In a punitive, litigious world where people file lawsuits over the ice content of drinks, slippery floors, and getting scared at a haunted house, legal perils are a very real risk. An umbrella insurance policy can help protect you.
You can buy regular liability insurance coverage for your car, home, and even your pet. But what happens if you get sued? That’s where your umbrella policy comes in.
For any financial damages that exceed your coverage limits, you have to pay out of pocket. That’s when your umbrella policy kicks in, covering the damages your regular liability coverage can’t.
Umbrella policies at home
Let’s say you have vindictive in-laws staying at your house. They’d do anything to ruin you.
One night, your mother-in-law slips in the kitchen and decides to sue you. Most homeowners insurance policies aren’t able to cover the legal costs of a lawsuit.
Luckily, if you have a homeowners umbrella insurance policy, you don’t need to worry. If your mother-in-law sues for $600,000 but you only have $500,000 in coverage, your umbrella policy will cover the remainder.
An umbrella policy is also useful if you own things that could lead to injury like trampolines, dogs, or swimming pools.
Umbrella policies for businesses
Let’s say you’re the proprietor of a local ice cream parlor and someone falls on your property. If they decide to file a lawsuit, it could put you out of business.
With a commercial umbrella insurance policy, your liability coverage is greatly extended to include financial damages, legal costs, medical costs, and loss of income.
You might be asking yourself: do I really need an umbrella insurance policy? That depends. Umbrella Insurance isn’t necessary for every individual.
Those with substantial assets, like expensive property, business ventures, or significant savings, should consider getting an umbrella insurance policy.
In the event that you’re sued for damages that exceed your typical liability coverage minimums, an umbrella policy can protect you from financial ruin.
Umbrella policies on the go
Umbrella insurance is also necessary if you’re in a job or volunteer position that increases your chances of being sued. These types of positions range from coaching kids sports teams to chairing nonprofit organizations.
If you have any high-risk hobbies, like rock climbing, surfing, or hunting, it may also be wise to protect yourself from lawsuits that can arise in their practice.
If you accidentally shoot your friend instead of a deer, for example, it might be good to have coverage.
For those who like to peel out on a jet-ski or ATV, an umbrella insurance policy would cover you in the event of an accident.
Most liability coverage excludes accidents these types of vehicles, and you can be left with a hefty bill if you take a tumble.
Getting under the umbrella
So why doesn’t everyone have an umbrella insurance policy? For starters, you must already have auto or property insurance to qualify.
You should also ask yourself if your net worth is worth the extra investment.
Umbrella insurance coverage limits are typically capped at $5 million, with some insurance companies capping coverage limits as high as $10 million.
Most umbrella insurance policies are also only available if you get your auto and homeowners insurance through the same company, though standalone umbrella policies are available through some insurers.
The amount of coverage you have to buy in order to purchase an umbrella policy also changes by insurance company, and can be prohibitively expensive.
Typically, you have to have at least $100,000 – $300,000 in bodily injury liability insurance and $100,000 property damage liability insurance to get an umbrella policy on your car.
But for those who qualify, the benefits are immense. Coverage limits for umbrella insurance policies typically start at $1 million, a bargain for the average cost of $150 – $300 per year.
This type of coverage applies anywhere in the world and can protect you from less common dangers like libel and slander lawsuits.
Let’s say you take a vacation and get sued. Your umbrella policy can save you from total ruin, especially in a place where the exchange rate isn’t in your favor.
Umbrella policy for a rainy day
If you aren’t convinced, let’s look at an example: you get into a car accident. Both cars are totaled and you and both drivers are injured.
Even if you’re covered for the entire accident, you can be sued for loss of income, medical expenses, and other punitive damages.
If you’re a landlord, an umbrella policy is an absolute necessity because it can protect you from property damage and lawsuits caused by tenants.
Imagine having to deal with multiple lawsuits caused by a burst pipe. Without umbrella insurance, you could go bankrupt, lose your property, and then get sued again for wrongful eviction.
There are things your umbrella insurance can’t cover, however. Those include your own personal property, business losses, crimes, and contracts.
Sadly, your umbrella policy can’t help you if you need to get bailed out of Peruvian prison or get swindled by a bad business deal.
For everything else, umbrella insurance can provide a fail-safe, fool-proof solution to protect your family, assets, and well-being.
In the world of umbrella insurance, having too much is always better than having too little.
We all know accidents happen. Sometimes, they can be expensive. We also know that when it rains, it pours. Luckily, you can stay dry in the stormiest of weather with a little help from your umbrella (policy).
Ask your Frontlight insurance broker if a personal umbrella insurance property is right for you. Frontlight: we’re here to keep your path clear.