Umbrella insurance: Increase your personal liability protection today

Umbrella insurance is a type of liability coverage that extends beyond the limits of property and casualty policies. It is often referred to ass excess liability insurance. So if you don’t have enough liability protection on either your auto insurance policy or home insurance policy, an umbrella insurance policy can fill in the gap to ensure you won’t be paying out-of-pocket for expenses such as legal fees, medical bills, and compensatory damages. 

This type of insurance can also protect you against liability risks that wouldn’t otherwise fall under the categories of auto and home insurance. For instance, if you’re being sued for libel or slander, umbrella insurance can pay for the damages involved. And the coverage isn’t only limited to the policyholder – it can also apply to members of your household or your family.

Personal umbrella insurance is generally an affordable way to get a substantial amount of coverage. This is because insurance companies require you to already carry car and home insurance as your primary coverage before purchasing the extended protection.

Although being held liable for your actions may seem unlikely, one lawsuit can quickly turn into immense financial trouble – and an umbrella insurance policy can provide the peace of mind you need, just in case.

Do I need personal umbrella insurance?

A personal umbrella insurance policy can be of use to anyone who is at risk of being sued – which essentially means everyone. However, some people are more susceptible to liability claims than others, so be sure to weigh your personal risks when deciding whether to purchase a policy.

Umbrella insurance is more popular and arguably necessary for high-net-worth individuals who have considerable assets—or very expensive assets—and are at a significant risk of being sued. Here are a few situations that could increase your risk of being sued and need for additional personal liability protection:

Umbrella insurance is a form of liability coverage – meaning it’ll foot the bill if you’re ever sued for bodily injury or property damage by a third party. Here are a few examples in which a personal umbrella policy would come in handy.

Auto insurance – After hitting a biker while driving on the road at night, you are sued for $1 million, even though you only purchased the minimum third-party liability coverage of $200,000 on your car insurance policy.

Home insurance – A mail carrier slips and falls on your icy driveway, and the jury awards them $150,000 in damages, plus another $1,000 for medical benefits. However, your home insurance policy only covers liability claims up to $100,000. 

Landlord insurance – Your tenant complains of improper maintenance after experiencing bed bug bites at your furnished apartment. You reach a settlement and agree to pay $100,000 in damages, but your landlord policy only offers $50,000 in liability coverage.

Boat insurance –  Your motorboat leaks gas into the water, resulting in an environmental liability claim that totals over $1 million in clean-up fees and compensatory damages. While you do have boat insurance, you never opted in for coverage against this specific risk. 

General liability claims – Your teenager gets into a fight at school and breaks a classmate’s arm, causing their parents to seek legal action for $50,000. This situation wouldn’t otherwise be covered by your home or car insurance policy.

What is not covered under an umbrella insurance policy?

Like all insurance policies, personal umbrella insurance has its own exclusions also – here are a few examples in which your insurer will most likely deny your claim.

Bodily injury or property damage of your own – Umbrella insurance is a form of liability coverage, meaning it only pays out when you’re being held liable for actions inflicted on others. It won’t cover the repair of your own vehicle after an accident if you don’t have collision insurance on your car policy.  

Business liability claims – You can purchase commercial umbrella insurance to help bridge the gaps in your business policy, but personal umbrella insurance won’t pay out claims related to your company operations. So don’t expect your umbrella provider to cover a slip and fall lawsuit at your restaurant. You'll need to first claim the funds from your commercial general liability policy, instead.

Intentional, criminal, or war acts – Like most other types of insurance, you won’t be able to make an umbrella liability claim if you purposely inflicted injury or property damage on someone else. Most policies also have exclusions when it comes to war and terrorist activity.

Contractual liability – If you assumed liability in an oral or written contract, your umbrella insurance company typically won’t agree to pay out the damages.

Communicable disease – Claims related to communicable diseases could also potentially be denied, so if you’re being sued because your child spread chicken pox at school, you may be on your own.