Beginner’s Guide to Personal Umbrella Insurance

Insurance Neighbor • April 16, 2021

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Personal umbrella insurance serves an essential purpose, as it provides liability protection above and beyond the policy limits on your vehicle, home, or boat. Every insurance policy has limits, and personal umbrella insurance kicks in once you have exceeded those limits, expanding your protection if a claim or lawsuit is filed against you.

Should I Have Personal Umbrella Insurance?

One of the vital protections provided by personal umbrella insurance is the ability to pay the damages in a serious injury accident, which could far exceed the limit in your auto insurance policy. If your insurance limit is exhausted, a lawsuit could be filed in an attempt to collect the difference. If successful, a judgment could impact your retirement accounts, bank accounts, investment accounts, or other assets.

What Does Umbrella Insurance Cover?

Umbrella insurance covers what your auto, home, or boat insurance does not cover, including:

  • Claims for bodily injury  
  • Personal injury lawsuits
  • Property damage claims
  • Landlord liability claims

Umbrella Insurance and Homeowner Claims

If you own a home, umbrella insurance can be a lifesaver. When damage to your home exceeds the limits of your current policy, you will pay for the difference out of pocket. These policies cover a range of potential problems that can impact any family, such as dog bites or any injury claim filed against a member of your household.  

Which Umbrella Insurance is Right for Me?

When purchasing umbrella insurance, the first step is a full valuation of your home and property, bank account balances, investment accounts, and other assets. For maximum liability protection, you should have enough umbrella insurance to replace all your assets should a lawsuit be filed against you or a member of your family. This insurance is typically sold in $1 million increments.

Who Needs Umbrella Insurance?

Some people need umbrella insurance more than others. For example, if you rent property, employ staff at your home, have a trampoline, pool, hot tub, or host large parties at your home, you should invest in umbrella insurance. Should a guest to your home be injured on your property, your homeowner insurance may not be enough to cover the cost of a claim – and you could be sued by the injured party and face disastrous financial repercussions.

How Much Does Umbrella Insurance Cost?

The cost of umbrella insurance varies based on the amount of coverage you buy. Generally, it is very affordable. The average price is between $150 to $300 per year for $1 million in coverage, as reported by the Insurance Information Institute . In most cases, the insurance company you choose will require you to have a specific level of auto, home, or watercraft insurance, as the limits on these policies must be exhausted before the umbrella insurance will pay.

How to Choose the Right Umbrella Insurance Policy

You have a unique situation. The first step in finding the best policy for you is to evaluate your financial situation, your level of risk, and your current insurance policies. We invite you to meet with one of our qualified, friendly agents to review your case and advise you of the various types of umbrella insurance policies available. We can assist you in finding the policy that offers the level of liability protection that makes the most sense for you.  

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