Umbrella insurance is an extra way to make sure you and your family are protected from the unexpected. It bridges the gaps between your other insurance policies, helping ensure you are ready for whatever comes your way.
What Is Umbrella Insurance?
Auto and homeowner insurance policies come with inevitable gaps because the coverage they provide has limits. Depending on your specific situation, net worth and other factors, the coverage may not be enough. That’s where umbrella insurance comes in.
Umbrella insurance fills in those gaps as a form of personal liability coverage. It protects from large claims or lawsuits that are more than the coverage of your base insurance policy. So the areas that your primary insurances do not cover are now protected by umbrella insurance.
Having umbrella insurance will give you peace of mind that even if the unexpected did happen, you could be covered.
Umbrella vs. Excess Liability Insurance: What’s the Difference?
Umbrella insurance often gets confused with many other types of insurance, such as excess liability insurance. Here are some of the differences:
Excess Liability Insurance
Excess liability insurance adds additional limits to basic insurance policies to keep policyholders more financially secure. It doesn’t change the terms of your existing insurance but instead extends your current limits to help prevent losses. You need an existing policy to get excess liability insurance.
Umbrella Insurance
Umbrella insurance would be considered a form of excess liability insurance. Though it is similar because it extends your liability limits, umbrella insurance provides more extensive coverage than excess liability. It can protect you in the event of a lawsuit or damage that occurs off of your property.
How Does Umbrella Insurance Work?
Sometimes accidents are costly. If you are at fault for a car accident, for example, you may be required to pay a lot more money than you can afford or than your insurance policy will cover. This is the type of situation in which umbrella insurance comes into play. Having umbrella insurance means having coverage for the remaining balance of a charge or lawsuit you are unable to cover yourself.
Umbrella insurance works for homeowner, auto and watercraft insurance and covers the policyholder as well as members of the policyholder’s family or household. Claims that may require umbrella insurance could include false arrest, slander, libel or liability coverage on your rental units.
Umbrella insurance also covers general areas like injury, lawsuits and personal liability situations.
Does Umbrella Insurance Cover Lawsuits? What Lawsuits Won’t It Cover?
Lawsuits are one of the main general areas that umbrella insurance covers. There are limits and exceptions to the type of lawsuits umbrella insurance covers that vary based on the insurance agency.
Here are some examples of the lawsuits umbrella insurance will not likely cover:
- Purposeful intentions: If a situation that led to a lawsuit began with actions taken by the policyholder or a member of their household on purpose, umbrella insurance would not cover the cost.
- Personal property: If the damaged property in question is your personal property and not someone else’s, it will not be covered by umbrella insurance.
- Businesses: Professional or business-related activities require a different kind of liability insurance and would not be covered by normal umbrella insurance.
In general, other lawsuits will be covered by umbrella insurance. It is important to sit down with your insurance agent and determine exactly what your umbrella insurance policy will cover.
What Does Umbrella Insurance Cover?
The point of umbrella insurance is to cover defense costs when you are faced with a lawsuit due to damages or injuries to someone else or their property. This will include the cost of hiring an attorney as well as other legal defense costs that come with lawsuits. It is also meant to cover the cost of damages should you lose the lawsuit. These damages could include injuries, property damage or other personal liability situations.
What Is Not Covered by an Umbrella Policy?
The goal of an umbrella policy is to provide protection over any sort of unforeseen event. This means that situations that were purposefully caused by a policyholder or member of their household themselves would not be covered by umbrella insurance.
Damages on your personal property will also not be covered, as there would typically be no reason for a lawsuit with only one person’s property involved. So umbrella insurance wouldn’t cover flood damage to your home, for instance. Umbrella insurance also does not cover any lawsuits that are protected under liability a policyholder assumed under a contract.
Who Needs Umbrella Insurance?
Umbrella insurance is a valuable asset to anyone even remotely at risk for being sued. This is a question to deeply consider, as it includes anyone from wealthy business owners to parents of teenage drivers. Any activity that puts you at risk for excess liability would make you someone who should consider getting umbrella insurance.
Here is a breakdown of more specific factors that should encourage you to get umbrella insurance:
- Property owners: If you are a property owner, and especially if you are a landlord, umbrella insurance is important to keep you and your livelihood protected.
- Those with significant savings or assets: Even if you can afford the cost of a lawsuit at the time, there is no reason not to be protected. A lawsuit could take away your savings, no matter how much savings you have.
- Teenage drivers: Teenage drivers are naturally more at risk for being in accidents and causing them simply due to their inexperience. Being protected should the other party involved in an accident sue you will be well worth it.
- Those with injury-prone possessions: Some normal household items can tend to lead to injury more often than others such as pools, guns or trampolines. Having these things and sharing them with others isn’t wrong, but should something unexpected happen, it is important that you are protected.
- Pet owners: If your pet injures someone else, umbrella insurance can cover the liability claims that happen as a result.
- Those who carpool: If you tend to be the go-to driver for your friends and family when you carpool, it is important that you are protected should anything happen to those in your vehicle.
- Those who host gatherings often: Hosting parties, especially if there is alcohol involved, leaves you liable to a host of damages but is typically covered by umbrella insurance.
Strock Insurance Has Umbrella Insurance for You
Strock Insurance has the umbrella insurance policies you need to bridge gaps and keep you and your household protected from the unexpected. We serve over 10,000 customers in the Central Pennsylvania area and can help you understand your insurance needs. Contact us today or get a quote to find out more about how our umbrella insurance can serve you.