What is Umbrella Insurance?

Posted: 24 August, 2023

An umbrella policy is extra protection that goes above and beyond your normal limits of coverage when it comes to liability. Umbrella policies can offer additional coverage for things like:

Injuries to others.
Legal fees and litigation.
Excessive property damage.
Other personal liability situations.

Umbrella policies are optional, but they do provide extra protection. One of the best benefits an umbrella policy offers is worldwide coverage. An umbrella policy is designed to be a form of secondary insurance, it will have underlying insurance requirements. This means that you'll have to have a certain amount of auto insurance and homeowners insurance coverage as a condition of being approved for an umbrella policy. The underlying insurance requirements will vary depending on the company you get your umbrella through, but typical coverage includes:

Auto insurance bodily injury coverage of $250,000 per person/$500,000 per accident.
Auto insurance property damage coverage of $100,000 per accident.
Homeowners insurance personal liability coverage of $500,000.

What does an Umbrella Policy cover? Personal umbrella insurance is designed to cover overages if the limits of the liability coverage in your primary insurance policies are too low to meet your financial obligations.

Vehicle coverage: This can include enhancing the liability protections provided by your car, motorcycle, RV, or other vehicle insurance policies.
Home coverage: This can include enhancing the liability protections provided by your homeowners, renters, condo, or townhouse insurance.
Other coverage: This can include enhancing the liability protections offered by your boat, ATV, landlord, or other personal insurance policies you might carry.
Your umbrella can also cover you for other types of liability if you’re sued for:
- Slander: defamation through a spoken word.
- Libel: defamation through written word.
- False arrest, detention, or imprisonment.

Rental and Investment Properties - Like liability coverage under your homeowner’s policy, an umbrella policy can also cover any liability claims involving any rental properties you own. For clients that own rental properties, each unit is an extension of liability. An umbrella policy is a wise investment especially for those who have these additional extensions of liability. Be sure to list all of your additional properties on the umbrella and that your investment policies carry the minimum underlying liability coverage so there is no gap from that policy to the umbrella.

What is not covered by an Umbrella policy? An umbrella policy generally doesn’t provided coverage for:

Your injuries or damage to your personal property
A criminal action causing damage to someone else.
Liability you assume under a contract.
The cost to repair or rebuild your home.

Who need an Umbrella policy? Accidents happen, and you may need an umbrella policy if you want to protect your assets and finances. An Umbrella policy can protect your assets up to $5 million or more depending on the insurer. Even though you might think you aren’t at high risk of being sued doesn’t mean you are no risk. The safest course of action is to be insured. Your financial situation can change, and you may need to add more coverage in the future. Make sure to reach out to emilan Premium insurance agents to provide you with the best coverage.

Written by: Premium Emilan