Personal Umbrella Insurance

Do not let one serious accident put everything you own at risk.

Personal Umbrella Insurance

Personal Umbrella insurance is one of the most valuable coverages and is typically very inexpensive. Umbrella insurance generally should service two primary purposes:

  1. Extended liability protection above your primary policies
  2. Fill in some gaps your primary policies may not offer.

Extended Liability protection

Your Auto, Home, Motorcycle, and other policies with your primary insurance carriers have maximum limits or limits that you decided to purchase; however, in case of a claim, you might be liable for greater amounts than your primary insurance policy limits. That’s where Umbrella insurance kicks in. It will extend the coverage above your liability limits on your primary policy. Usually, Umbrella policies are sold in increments of 1 million dollars.

Here is an example of an Umbrella policy in action. You have an Auto insurance policy with a Bodily Injury Liability limit per person at $250,000 and a $1 million Umbrella. You were involved in an accident with another driver who was severely injured. The bodily Injury claim ended up being $800,000. In this case, your Auto insurance policy will pay $250,000 since this is the limit of Auto insurance liability you purchase. Umbrella will cover the rest of the claim within the limit listed on the Umbrella policy. So, Umbrella will pay $550,000 since it’s within its limit of 1 million dollars. If you didn’t have an Umbrella policy, you’d personally be responsible for $550,000, and your personal assets might be at risk.

Fill in some gaps your primary policy may not cover

Your Auto insurance will pay for Bodily Injury and Property Damage but not for Personal Injury claims that may arise. Most “true” Umbrella policies (not just Excess Liability) will offer additional protection, such as Personal Injury coverage. This type of coverage may include protection against claims of defamation of a character, privacy invasion, false arrest or imprisonment, malicious prosecution, wrongful entry, or eviction. Umbrella may also extend coverage to dog bites claims, which dog owners find very useful since the average dog bite claim is in the $30,000 range.

The best part is that Umbrella policies are fairly inexpensive for such a large amount of coverage. The price will depend on your specific situation.

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