Accidents are an unfortunate part of everyday life, and without proper protection, they can quickly lead to significant financial distress. While you may have liability insurance through your auto and homeowners insurance policy, standard limits typically do not exceed $500,000. If your assets exceed your liability insurance limits, an umbrella insurance policy can provide an extra layer of protection.
Key Takeaways:
- Umbrella insurance provides additional liability coverage that goes beyond standard limits of an auto or residential insurance policy.
- Umbrella insurance limits typically start at $1 million but can reach $5 million or more.
- You may want to consider purchasing umbrella insurance if you own assets that exceed the liability limits on your existing policies.
What is Umbrella Insurance?
All insurance policies have coverage limits. However, an umbrella insurance policy provides additional liability coverage for your assets that goes beyond what your homeowners, auto, or another vehicle insurance policy may provide. This extra level of protection kicks in after you reach your liability limits on your standard insurance policies but can also cover situations your existing policies do not. Here’s a quick rundown on what a typical umbrella policy will cover:
- Bodily injury liability: If someone injures themselves on your property or you are responsible for injuring someone in a car accident, this helps cover medical bills associated with their injuries.
- Property damage liability: This added level of liability coverage may help to repair or replace another’s property if you have low liability limits on your auto policy. Additionally, this can help cover damage-causing incidents by your pet or child.
- Lawsuits: An added benefit to umbrella insurance is that it protects against certain types of lawsuits that your existing policies likely do not, such as slander, invasion of privacy, libel, or malicious prosecution.
- Advanced landlord protection: If you own a rental property, umbrella insurance can provide additional liability coverage that exceeds what your landlord insurance policy offers.
What Will Umbrella Insurance Not Cover?
Umbrella insurance covers damages you are liable for, but it will not cover repair or replacement costs for any of your personal property that incurs damage, nor will it pay for your medical bills. To have full coverage in these scenarios, you’ll need to have additional types of coverage such as health insurance or collision coverage.
Although an umbrella policy offers legal protection, it will not cover liability that stems from a breach of contract you entered into. For example, let’s say a remodeling company claims you haven’t paid for work they have done under the contract that you signed. If they attempt to sue you to recover their funds, your umbrella insurance provider will most likely not provide any help. Additionally, if you purposefully injure someone or commit a crime, your policy will not offer any form of coverage for your legal fees.
Who Should Purchase an Umbrella Policy?
Since umbrella insurance provides additional liability protection that exceeds standard limits, purchasing a policy makes sense if you have significant assets to safeguard.
You may also consider a policy if you participate in activities that may increase your liability risk, such as having a swimming pool at your home, owning a large dog, or having multiple rental properties. If you need help deciding whether a umbrella insurance policy is right for you, our insurance specialists can help. To learn more, give us a call at (888) 772-4247.
How Much Umbrella Insurance Do You Need?
The amount of additional coverage you’ll need, if at all, will depend on your total assets. Begin by adding the value of your properties, vehicles, savings, and investment accounts. Next, compare that figure to the liability coverage limits you already have through any of your existing policies.
If you discover that your current policies do not offer enough protection, you can purchase an umbrella policy that makes up the difference. If your coverage limits exceed your total assets, you most likely do not need to purchase umbrella insurance.
AIS Can Help You Protect What’s Yours
Umbrella insurance is meant to give you peace of mind knowing that you have an extra level of protection that exceeds standard coverage limits. Even if you do not own a home, purchasing an umbrella policy can still be worth it if you have an auto policy with low liability limits. Regardless of your situation, AIS is here to help. Our specialists know what to ask and can help guide you in the process of safeguarding your assets. To learn more about umbrella insurance coverage, give us a call today at (888) 772-4247.
The information in this article is obtained from various sources and offered for educational purposes only. Furthermore, 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.
