Umbrella
Insurance

What is umbrella insurance?

Umbrella insurance is a type of personal liability insurance that ensures that you are covered against all claims against you, even if your regular homeowners, auto, or watercraft policy coverage should fall short. If you are ever liable for a claim that exceeds your policy provisions, umbrella coverage can prove indispensable.

Aside from providing security against excessive claims on your other insurance policies, umbrella insurance also covers some things that you will not find in the provisions of any other type of insurance policy, including libel, slander, malicious prosecution, wrongful entry, invasion of privacy and false imprisonment.

Umbrella insurance doesn’t only cover the policyholder; all members of the household are covered. The incident doesn’t have to involve your property or vehicle directly to be covered by your umbrella policy.

How do I know if
I need umbrella insurance?

Umbrella insurance is great to have, just in case you should find yourself in the midst of a lawsuit in which you have to pay excessive damages awarded to the other party, and your homeowners or car insurance won’t cover them. Does this make it worth purchasing, however? How do you know if you really need this safety net? A general rule to help you decide is to compare the total value of your assets with the limits of your homeowners or auto insurance. If your total assets exceed what your policies will pay, then it is advisable to take umbrella coverage to make sure that you have enough liability insurance to cover your assets so you don’t lose them in a lawsuit.

While this advice may seem sensible, the reality is that juries will often award damages in excess of a defendant’s insurance policy limits. Since the risk of being sued is ever-present – even if you don’t think it is – it is really always advisable to take umbrella coverage, even if your other policies are expansive and well provisioned. It’s worth it just for peace of mind. Instead of looking at your insurance limits and the value of your assets, think about how many factors in your life increase the likelihood of being sued. Do you have a dog that might attack a neighbor? A swimming pool? A trampoline?  An inexperienced driver in the household? All of these increase your risk of facing litigation. You can keep those risks at bay and sleep more easily at night if you have an umbrella insurance policy.