No matter how careful you are, accidents happen. After all, you can’t control the other drivers on the road. If you do get into an accident, you may be faced with an unforgiving lawsuit. While you may have Liability Insurance coverage on your Auto Insurance policy that provides some protection, oftentimes it isn’t enough. So, what do you do when someone is suing you for $750,000 and your Liability Insurance limits only cover up to $250,000? Avoid ever asking yourself this question by purchasing an Umbrella Insurance policy, which is an extra layer of Liability coverage that protects your assets and helps cover your legal fees in a lawsuit.
What Does an Umbrella Policy Cover?
An Umbrella Insurance policy can protect you against these three categories:
- Bodily injury settlement to another person
- Property damage or loss to another person’s tangible asset
- Personal injury judgments caused by the policyholder or its covered members resulting from slander, libel, emotional distress, or malicious prosecution.
What an Umbrella Policy Does Not Cover
Unfortunately, there is no insurance policy that exists that covers all your mishaps under any circumstances. In other words, no insurance policy covers everything as all insurance policies includes exclusions. But, the great thing about an Umbrella policy is that it provides broad coverage and specifically outlines what is and is not covered.
Here’s what an Umbrella policy won’t cover:
- Damage to your own property
- Damages that you caused on purpose
- Any liability claims arising from your business or professional activities
- Damage by war, riots, or armed conflicts
9 Reasons You Need Umbrella Insurance
You may have heard horror stories about families going bankrupt after being sued for astronomical medical bills, property damages, or even bad-mouthing someone. The following activities below may seem harmless but can increase your chances of being involved in a lawsuit.
Consider getting an Umbrella policy if you:
1. Have Kids (Especially a Teenage Driver)
Having an inexperienced driver in your household may significantly raise the risk of being involved in an accident. But it’s not just your teenage driver you need to worry about. You are also held responsible for any harm your kids under the age of 18 inflict on another person like seriously injuring another student in a school fight.
2. Are a Landlord
Renting out your property poses another risk. Let’s say a faulty gas leak you weren’t aware of caused serious injuries to your tenant and as a result, they developed a respiratory infection. Or perhaps your tenant sues you for wrongful entry or invasion of privacy. As a landlord, you are responsible for any injuries that occurred on your property, as well as complying with all state and local health and building codes. On top of getting Landlord Insurance, consider getting Umbrella Insurance for extra protection.
3. Have Significant Savings or Other Assets
Maybe you are well-off or next in line to inherit a family estate. You may want to protect your assets since you have a lot to lose. Once your Liability coverages are exhausted, an expensive lawsuit may target your assets. That could be anything from your home, rental properties, cars, boats, RV, and in some cases, your retirement savings.
4. Frequently Host Parties in Your Home
Are you somebody who loves to entertain? As fun as it can be, it comes with all sorts of risks. There is the common slip-and-fall scenario, but did you know you can be sued for someone leaving your party drunk and getting into an auto accident? The other party can easily include you in the lawsuit as the person who provided alcohol to the defendant resulting in expensive legal fees.
5. Have a Swimming Pool
In addition to hosting parties, maybe you have a swimming pool and like to invite friends over to cool off in the summer. A freak accident could occur where someone is injured or drowned from a flip they were attempting on the diving board. Even survivors of drowning can suffer from brain or organ damage resulting in life-long disabilities. Guess who is responsible for their medical expenses, loss of income, emotional distress, and future medical care? That would be you, the homeowner.
6. Hire Domestic Workers
Do you have a nanny, housekeeper, gardener, caretaker, or employ other domestic workers? Consider getting an Umbrella policy to protect yourself from a wide variety of lawsuits like allegations of discrimination, wrongful termination, harassment, and personal injuries. However, be aware that some states require employers to provide Workers’ Compensation coverage for all employees, including domestic workers. For details on these laws in your state, check out the National Federation of Independent Business site here.
7. Have a Dog
According to the Center for Disease Control (CDC), approximately 4.5 million dog bites occur in the United States each year. Of that figure, 800,000 of those dog bites required medical care. In the event your dog bites your mailman, you’re responsible for their bodily injury. However, be careful: if your Homeowners policy excludes certain dog breeds, it’s likely that an Umbrella policy won’t cover them either.
8. Are a Public Figure
Celebrities or high-profile individuals with a huge following need more protection than the average person. With many users frequently on social media, a fiery tweet or posting can ruin another person’s reputation if they decide to sue them for character defamation. Similarly, a dissatisfied review left for a local restaurant can cause loss of income for the business and result in a whopping lawsuit.
9. Participate in a Sport
Almost all sports teams require every player to carry Health Insurance to cover any injuries. But don’t forget about injuries that you may inflict on other players. Physical contact sports like basketball, football, or wrestling could cause serious harm that your Health Insurance may not cover. A solo sport like hunting or cycling can also result in an expensive bodily injury lawsuit.
Don’t Wait for an Accident to Happen
One misstep or unforeseeable accident can financially ruin everything you worked so hard to have. Umbrella Insurance can prevent such an outcome by providing an extra level of protection to these assets. The best part about it? It’s inexpensive to carry this type of policy. According to the Insurance Information Institute, a $1 million policy costs around $150 to $300 per year. That’s less than $1 a day. We understand that accidents sometimes happen, so let’s prepare and be ready. Speak with an Insurance Specialist today at (855) 919-4247 for a free quote on Umbrella Insurance.
The information in this article is obtained from various sources. This content is offered for educational purposes only. It should not replace the advice of a qualified professional. The definitions, terms, and coverage in a given policy may be different than those suggested here. No warranty or appropriateness for a specific purpose is expressed or implied.