TLTR: This article explores umbrella insurance, its coverage, and other relevant liability policies associated with it.
Personal umbrella insurance is personal liability coverage for your losses that standard insurance policy limits do not cover. In other words, it will fill the gap left open by your home or auto insurances.
Suppose you have your car insured with standard car insurance and the liability coverage is $5000. While driving with four of your friends, you get in an accident and seriously injure three of them. Unfortunately, your insurance cannot cover all of their medical payments. However, personal umbrella insurance will cover the medical bills.
Basically, the umbrella policy will add extra liability coverage over your standard policy.
What Does Personal Umbrella Insurance Cover?
Personal umbrella insurance is all-encompassing liability coverage. With this policy you will be sure that come what may, your finances will not be threatened. It covers your home as well as loved ones from claims in excess of other insurance’s standard limits.
Here are some of the coverages provided by your umbrella policy:
Auto injury liability
This coverage protects you and your family from liability payments that are more than what your standard auto insurance pays out. If the injured party decides to file a lawsuit against you, then your insurance will pay for the legal fees as well.
For example, your spouse gets in a car accident, and seriously injures the other driver. Umbrella insurance will cover their medical bills as well as funeral charges if needed. This coverage takes over when your auto liability insurance reaches its limit.
Property damage liability
This coverage will pay out any damages to others’ property on your behalf. Suppose you collide into an expensive car while trying to park. While the costs of repairing their car may not be completely covered by your standard coverage, umbrella policy will make sure that the bills are paid in full.
People who visit your property may get injured due to things like a slippery staircase or uneven carpet. In such cases, the medical bills they incurred from their injuries will be paid out by insurance. The coverage kicks in once your standard liability insurance reaches its limit.
Suppose while a handyman is visiting your home to repair a broken TV, they trip over your rugs and fracture their left leg. Moreover, they hit their head and suffer neurological ailments, which will take a significant amount of time and money to recover from. The cost of their treatment will be covered by your policy.
In addition to that, you are covered from lawsuits pertaining to libel, slander, false imprisonment, mental torture, and such.
Exclusions of Personal Umbrella Insurance
Your umbrella coverage will not cover everything under the sun. Before you get an umbrella insurance policy, understand that your policy will not provide coverage for the following:
- Damages to your own property.
- Medical bills for yourself or covered family members. Umbrella coverage only covers third-party medical expenses.
- Criminal acts or intentional damages.
- Damages or losses that your business is liable for.
Is Personal Umbrella Insurance Worth It?
Personal umbrella insurance is liability coverage that is quite beneficial to everyone. In a society as litigious as ours, lawsuits and the resulting financial damage can happen to anyone. A standard liability insurance policy has a limit of coverage which may not always be enough to cover all expenses. Medical and legal bills tend to skyrocket even with a good insurance plan in place.
Suppose your car insurance covers the liability of up to $5,000. You get in a car accident, and the driver is seriously injured. They decide to sue you for $1 million. Your insurance only covers a fraction of that amount. If you have umbrella liability coverage, then you are able to pay the remaining amount without having to pay anything from your own pocket.
How Much Does Personal Umbrella Insurance Cost?
Personal umbrella insurance is relatively affordable although policies begin with $1 million in coverage. According to the Insurance Information Institute, a $1 million coverage roughly costs you $150 – $300 in annual premium.
What Is Personal Excess Liability?
While personal umbrella insurance shares key features with personal excess liability, they are not the same.
Personal excess liability simply gives your standard liability coverage a boost. If your standard policy limits are $5,000, then personal excess liability can extend your limits to $10,000. Although it provides the policyholder with a safety net, it has the same limitations as the standard home and auto policies. It increases the amount of coverage, but not the areas of coverage. For example, if your home insurance policy does not cover your unattached buildings, your personal excess liability coverage won’t cover them either.
Comment below if you have any questions regarding personal umbrella insurance or personal excess liability. To have access to the best agents around, see our agent directory today!
Frequently Asked Question
Do I have to be rich to need personal umbrella insurance?
You don’t need to have a certain amount of money in the bank to qualify for an umbrella policy. The purpose of this coverage is to protect you from any potential financial risks over and above your underlying coverage’s limit. Medical bills as well as legal fees tend to easily skyrocket. This coverage helps you protect your finances from entering a freefall due to these bills.
Does personal umbrella insurance cover uninsured motorists?
No, most of these coverages do not cover uninsured motorists. However, get in touch with your insurance agent for more information.
Does personal umbrella insurance cover car rentals?
Yes, it will cover the costs if you are liable for damages while using a rental car.
Does personal umbrella insurance cover malpractice?
Yes. If your malpractice insurance policy limits exceed your legal fees, then your business umbrella policy can kick in and cover the rest.
February 9th, 2023 · 7 read
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