It’s not the type of umbrella you use in rainy weather. Umbrella Insurance, also referred to as Umbrella Liability Insurance or Excess Liability Insurance, provides an additional layer of protection for all of the insurance policies you own. In the event of a more serious accident or injury, the liability limits on a standard Home Insurance or Car Insurance policy might not be enough. And that’s where Umbrella protection comes in.
Looking for a fail-safe for your savings and other assets? Umbrella coverage is an affordable way to protect yourself and your family from the financial consequences of an unexpected accident.
Please note – businesses require a different type of protection called Commercial Umbrella Insurance.
A Closer Look at Umbrella Insurance
Umbrella Insurance provides an additional amount of Liability Coverage in the event of an accident or injury that exceeds the coverage you are carrying on any of your other policies. A single Umbrella policy covers all underlying policies you own, which could include your Auto Insurance, Home Insurance, Boat Insurance and more. However, Umbrella Insurance is not required if you are carrying any of these policies.
An insurance policy, such as Car Insurance, includes several different components, such as:
- Collision Coverage;
- Comprehensive Coverage;
- Uninsured Motorist Coverage; and,
- Liability Coverage.
This last item, Liability Coverage, protects the policyholder from paying for injuries or accidents involving a third-party. Liability Coverage could provide compensation for people who are injured in a car accident you caused, for example.
Let’s say your Auto Insurance has a $300,000 limit of Liability Coverage for car accidents. If you caused significant damage to an expensive vehicle with five passengers inside, you may be liable for more than $300,000 worth of damage. And without Umbrella protection, any excess liability fees would come directly out of your own pocket.
Umbrella Insurance FAQs
Do I need a Personal Umbrella Policy?
Unfortunately, anyone could be involved in an accident that causes expensive injuries, or involves legal action. Because Umbrella Insurance provides a significant amount of excess Liability Coverage for an affordable rate, it makes sense for a lot of people. Peace of mind is priceless!
Umbrella coverage also makes sense for individuals who own a lot of assets, and/or those who are at a heightened risk of being sued. This could include:
- Homeowners with a pool, trampoline, golf cart and/or ATVs
- Homeowners with an aggressive or territorial pet
- Individuals who engage in “high-risk” sports, such as skiing or hunting
- Individuals with lots of acreage and vacant land
- Individuals with a large net worth, particularly in excess of $1M
- Youth sports coaches
Several of the items mentioned above that increase your exposure to liability, such as a pool or aggressive dog, can also translate to higher pricing on your Homeowner’s Insurance premium.
What does an Umbrella Insurance Policy cover?
This insurance provides excess Liability Coverage when the limits of your Home, Car, Boat or other insurance policy have been exceeded. These expenses could include:
- Bodily Injury – another person’s medical bills, for example
- Legal Fees – to defend yourself in a lawsuit brought forth by another party
- Personal Detriment – such as libel, slander, and/or mental anguish of another person
- Property Damage – to another person’s car, or other tangible property
Liability Coverage protects a policyholder from damages incurred by a third-party. Damages incurred by the policyholder would correspond to a different type of coverage in their policy. Thus, an Umbrella policy is exclusively for high-dollar claims brought forth by other persons against the policyholder.
Need help with insurance lingo? Check out our Glossary of Insurance Terms.
How does Umbrella coverage work?
This insurance comes into effect when the limits of Liability Coverage on another policy have been exceeded.
We used the example of a car accident above. Let’s say you are responsible for a car accident that causes $500,000 of damage to another vehicle and its passengers. If your Car Insurance policy has a limit of $300,000 in Liability Coverage, you would need to provide the additional $200,000. A Personal Umbrella policy could cover this for you. Otherwise, it would need to be paid out-of-pocket. A settlement of that size could be financially devastating for many people.
Does Umbrella Liability Insurance have any coverage exclusions?
Any time you purchase insurance, it is important to know what is (and is not) covered. Below are a few examples of scenarios that would not be covered this type of policy:
- Intentional Damages – such as crime and purposefully harmful behavior
- Personal Property – including any tangible possessions of the policyholder
- Written and Oral Contracts – for a third-party who was hired to provide a service (house painters, for example)
- Business Damages – which would correspond to a Commercial Umbrella Insurance policy.
How much does an Umbrella Insurance Policy cost?
This policy typically comes in million-dollar increments, beginning at $1M of coverage. Fortunately, it does not cost nearly this much to buy it!
As a very general benchmark, $1M of protection could cost $150-300 per year. However, it is important to note that you may be required to carry a minimum amount of Liability Coverage on your other policies before you can buy Umbrella Liability Insurance. You may also qualify for bundle discounts when you purchase all your policies through the same insurance company.
How to Buy an Umbrella Policy
A standard policy may not provide enough Liability Coverage to protect your family from the financial consequences of a lawsuit. If you have already purchased a policy for your home, boat, car or ATV, consider adding extra financial protection with Umbrella coverage from Webb Insurance. With more than 35 years in the insurance industry, our team of Insurance Brokers in St. Charles, Mo., can help you secure the coverage you need to achieve peace of mind.
Time to level-up your liability protection? Get a free Umbrella Insurance quote with no obligation to purchase.