What is an Umbrella Policy? Everything You Need to Know
When it rains, we grab an umbrella for protection from the elements. Turns out this isn’t the only kind of umbrella that can protect us. An umbrella insurance policy is a type of personal liability insurance that covers claims that exceed your regular homeowners, auto, or watercraft policies.
An umbrella insurance policy can cover you for things such as personal injuries, property damage, and legal fees. It can also provide coverage for certain types of lawsuits that are not covered by your regular liability insurance policy, such as defamation, libel, and slander.
Importantly, umbrella policies provide coverage for all members of the family or household, not just the policy holder. This is especially important if you have teen or young adult drivers in your household.
While most of us don’t even like to consider the scenarios that could lead you to need an umbrella policy, that doesn’t stop them from happening. Car accidents, dog bites, malicious social media posts, and mishaps related to parties are just a few of the unfortunate events that can lead to lawsuits and financial disaster.
Here are a few Frequently Asked Questions about umbrella insurance policies:
How do umbrella insurance policies protect you?
Umbrella policies are valuable because they typically have a higher limit of liability than your regular homeowners, auto, or boat insurance policy. For example, if you have a $500,000 umbrella policy and you are sued for $600,000, the umbrella policy will pay the additional $100,000.
Who needs an umbrella insurance policy?
Anyone who is at risk of being sued for damages that exceed the limit of their regular liability insurance policy should consider buying an umbrella insurance policy. This includes people who own a home, have a boat, or are involved in any type of business. If you are concerned about your personal assets, an umbrella insurance policy can help protect them.
Is an umbrella policy part of your homeowner’s insurance?
No, an umbrella policy is not part of your homeowner’s insurance. An umbrella policy is a separate policy that you can purchase to provide additional liability coverage.
Does an umbrella policy cover things that happen away from your property?
Yes, an umbrella policy can cover you for things that happen away from your property. For example, if you are sued for libel or slander, your umbrella policy can help pay for your legal expenses.
Does an umbrella policy protect you against anything besides lawsuits?
Yes, an umbrella policy can also protect you against certain types of natural disasters, such as hurricanes and earthquakes.
How much does an umbrella insurance policy cost?
Umbrella insurance is quite affordable. According to the Insurance Information Institute, a $1 million policy runs between $150 and $300 per year.
While an umbrella policy is not required, it is a good idea for most people. If you want to learn more about umbrella insurance, contact our experts at 610-442-3530.