An umbrella insurance policy is a type of personal liability insurance that provides additional coverage beyond the limits of the insured’s homeowners, auto, and watercraft personal insurance policies. It serves as a secondary layer of protection that kicks in when the limits of the underlying policies are exhausted.
For example, if you are at fault in a car accident and the damages exceed the limits of your auto insurance policy, your umbrella policy would help cover the remaining costs, up to the limit of the umbrella policy. This can include not only the physical damages and medical expenses but also legal fees if you are sued.
Umbrella insurance is designed to help protect your assets and your future in the event of a claim that is large enough to surpass the limits of your standard policies. It can cover a broad range of scenarios, including personal injury, property damage, certain lawsuits, and personal liability situations that may not be covered by other insurance policies.
Given its broad coverage and high limits, umbrella insurance is particularly beneficial for individuals with significant assets or potential exposure to liability claims. It provides peace of mind by offering an additional safety net, ensuring that you are less likely to face out-of-pocket payments for large claims or lawsuits.
Should I carry an umbrella policy?
An umbrella insurance policy is particularly beneficial for individuals who have a higher risk of being sued for damages or injuries they might cause. Here are some categories of people who should strongly consider carrying an umbrella insurance policy:
- Property Owners: If you own property, particularly if it’s a location where accidents can happen (like a swimming pool, trampoline, or rental property), you have a higher risk of facing liability claims. Umbrella insurance can offer extra coverage beyond your homeowners’ insurance.
- Vehicle Owners: Owners of cars, boats, motorcycles, or other vehicles are at risk of accidents that might exceed the liability coverage of their existing policies. Umbrella insurance can provide additional coverage.
- High-Income Earners: If you have a high income or substantial assets, you might be a target for lawsuits. Umbrella insurance can help protect your assets and future earnings if you’re sued for damages that exceed your standard policy limits.
- Parents: If you have children, particularly teenagers (who might be driving), you’re at a higher risk of liability. Kids can inadvertently cause injuries or damages that might lead to expensive claims.
- Pet Owners: Certain pets, especially dogs, can pose a liability risk if they injure someone. While some homeowners’ insurance policies cover pet-related incidents, they may not cover all breeds or the full extent of a claim.
- Individuals with High-Risk Hobbies: If you engage in activities that could increase your risk of being sued—for example, hunting, boating, or skiing—an umbrella policy provides extra protection.
- Professionals with Liability Concerns: Certain professionals might be at a greater risk of personal lawsuits due to their occupation or public profile.
- Landlords: Owning rental property can increase your liability risks, especially if a tenant or their guest gets injured on your property. Umbrella insurance can provide additional liability coverage beyond your landlord insurance.
Ultimately, umbrella insurance is a prudent choice for anyone who wants to protect their assets from the possibility of a lawsuit that exceeds the limits of their existing liability insurance policies. It’s about assessing your personal risk factors and deciding if the additional coverage aligns with your need for financial security and peace of mind.
For more information on an umbrella Insurance policy contact ABM Insurance & Benefit Services at 281-448-3040.