According to surveys, 87% of Americans have an auto insurance policy, and at least 85% have homeowners insurance in 2021, meaning most of the population has protection against property damage and liabilities.
But, while these data reveal good news, unfortunately, standard insurance may not be enough to provide extensive liability coverage. For example, what if your driving caused an accident and the injuries sustained by the other party are serious? With skyrocketing medical expenses and an expensive lawsuit, your coverage will surely be exhausted and leave you with more to pay.
Sadly, you will have to deal with the remaining cost of damages by taking money out of your pocket. So, is there a way to avoid this situation? Thankfully, there is, and it’s in the form of a personal umbrella insurance policy.
What is a Personal Umbrella Policy, exactly, and how can it help you?
A personal umbrella insurance policy will provide the extra liability coverage you need when your existing insurance has already reached its limit. In addition, it will help you cover the cost of damages when your standard insurance is not enough to pay for it.
As a more straightforward explanation, when your property causes injury or damage, and you get sued for a million dollars, but your insurance only covers up to $500,000, the remaining $500,000 will be covered by your umbrella insurance.
In this case, you will need to personally pay the half million from your pocket if you don’t have an umbrella insurance policy. And unfortunately, many lose their savings and assets when this happens.
Benefits of personal umbrella insurance policy
Personal umbrella insurance protects you from potentially expensive and overwhelming liability claims. So, when your standard insurance policy can’t handle these lawsuits, you have your umbrella insurance as a safety net. With it, you won’t have to worry about spending money out of your pocket to pay for damages that your standard insurance can no longer cover.
Specifically, it will provide coverage for the following:
- Accidents in your home or property. When an accident occurs in your home and someone sustains injuries, your umbrella insurance policy will cover the medical expenses and other liability claims on top of your property insurance.
- Pet-related injuries. If you have pets and they bite someone, you will be held liable for bodily injury. So, if your home insurance is not enough to cover medical expenses and other damages, you can depend on your umbrella insurance for more coverage.
- Property damage above a home policy. When you cause injury or damage to other people’s property, you may suffer costly lawsuits, especially when the accident results in serious injuries or loss of high income for a significant time. Unfortunately, standard insurances can’t completely cover large liability claims. So, this is when your umbrella insurance comes in to provide the extra coverage you need.
- Damage caused by family members or dependents. You’re not the only one covered by umbrella insurance. When your family members cause accidents that result in costly liability claims, umbrella insurance will also cover the cost of damages beyond your standard insurance policy. However, remember that family members refer to the people who live with you and those you specifically mentioned as dependents on your insurance policy.
- An umbrella policy may specifically cover defamation charges, be it slander or libel. So, if you’re at risk for these charges, you will benefit significantly from umbrella insurance.
Frequently Asked Questions About Personal Umbrella Insurance Policy
Umbrella insurance provides guaranteed coverage for damages above the limitations of your existing insurance. It is something that anyone will benefit significantly from, especially since accidents can still happen no matter how careful you are. And accidents can sometimes be extremely costly.
But before you get umbrella insurance, make sure you know everything about it to avoid surprises. Here are some FAQs to help you out.
Who needs umbrella insurance?
An umbrella insurance policy is not required, but anyone who wants extra liability protection will benefit significantly from it. And since accidents can happen to anyone, you will
So, if you have a standard car or property insurance policy, getting umbrella insurance is guaranteed to protect yourself and your family when expensive lawsuits come your way.
What is not covered by umbrella insurance?
When you cause damage to your property, the expenses are not covered by umbrella insurance. The same goes for business losses, business-related liabilities, criminal actions, and lawsuits from contracts.
If you’re at risk for these liabilities, you will need a suitable insurance policy, such as business insurance.
How much does umbrella insurance cover?
Umbrella insurance usually starts at one million coverage and up to five million. However, to get one, you must first have an existing insurance policy, such as home or car insurance.
How much does it cost?
The premiums for umbrella insurance vary depending on what’s stated explicitly in the insurance policy. So, it’s best to consult a reliable insurance company and get a quote.
Can I use it anywhere?
Yes. Umbrella insurance covers liability claims anywhere, even when you’re out of the country.
Knowing everything about umbrella insurance will help you make the intelligent decision to get a policy and enjoy its protection. Because while it’s great to have a standard home or car insurance policy, being prepared for catastrophic events that could drain your finances is the best way to gain peace of mind.