Broker Check

April may want to grab an Umbrella policy!

April 18, 2022

Umbrella insurance also goes by another name - Personal Liability Insurance.

This is an additional insurance policy that provides protection beyond the limits of homeowners, auto or watercraft insurance policies.  Incidents do not have to involve your home or vehicle for your umbrella insurance to cover them. 

This type of insurance covers claims in excess of a regular auto or homeowner’s policy and covers injury to other people or damage to their possessions.  While it doesn't protect the policyholder's property, it does cover the policy holder and other household members.  It is typically pretty inexpensive compared to auto and homeowners’ coverages. 

As a general rule if the total value of your assets is greater than the limits of your auto or homeowner's liability you should purchase enough umbrella insurance to fully cover your assets so you cannot lose them in a lawsuit.  You may want to consider increasing umbrella coverage beyond this amount even, as many experts agree you cannot have too much insurance in a litigious society.

Some people are more likely to need an umbrella policy than others - if you own property, rent out property, employ household staff, have a trampoline, hot tub, pool, host large parties, are a well-known public figure, have a teenaged driver, or own a dog you are at greater chances of needing this coverage.  Additionally, anyone who is risk averse will sleep better knowing they are protected by an umbrella policy. 

A potential pitfall is a gap in coverage due to differences between auto/home and umbrella coverage - one way to reduce this is to have one insurance agency underwrite your underlying auto, home and umbrella policies giving them the same expiration dates...or work with the same insurance broker to look for policies that align. 

The price of obtaining a $1 million of personal liability coverage from an umbrella policy is relatively low generally costing between $150 and $300 a year according to the Insurance Information Institute and for every $1 million of financial protection the incremental premium cost tends to gradually diminish.