Umbrella insurance helps to protect you from being sued and when your liability insurance runs out. Not everyone needs it, but it can lift a huge financial burden.
What is umbrella insurance?
Basically, umbrella insurance is an addition to your liability coverage. If you had a very large claim for which you were at fault, or a lawsuit against you, umbrella insurance would cover you. This insurance protects you from the large costs that are a result of these situations.
How does it work?
Umbrella insurance works by providing coverage when you go over your liability insurance. This goes for your liability of every kind, including on your homeowner’s, auto and boat insurance. When you reach your limits on any of these regular liability policies, that is when your umbrella insurance opens up and blocks the rest of the rain, the cost.
Umbrella insurance can also cover the cost of things that are excluded from your other liability policies. This can include libel, liability on rental properties and more.
What does it cover?
Your umbrella insurance policy can cover the costs of injuries, property damage and lawsuits. Your regular auto and homeowner’s policies may also cover some of these things, but if you reach your limits you will need umbrella insurance to cover you.
Bodily Injury Liability is the part of an umbrella insurance policy that covers physical injury to someone other than the people living in your household. This includes both the claims and the medical bills of the injured person. This can be when you cause injury in a serious auto accident where you are at fault, injuries from a fall inside of your home, injuries from a fall in your yard and injuries caused by someone else in your household, such as a child or dog.
Property Damage Liability covers loss of or damage to another person’s property. This can be when your auto insurance liability runs out when trying to repair the other person’s vehicle after an accident for which you were at fault. It can also provide coverage for when your child or pet destroys or damages property at a friend’s house or at school.
Your umbrella insurance policy can also cover you if you own a rental property. If someone is hurt on your rental property and they are injured and/or sue you, your policy will protect you from that cost. You can also be covered in situation where a tenant’s pet hurts another person and that person files a claim as a result.
Court costs are another thing covered by your umbrella insurance. When a lawyer defends you in court after you are sued, you might have to pay some of the cost out of pocket. Many lawsuits take a while, and they are very expensive. You can reach the limits of your regular coverage quickly. An umbrella policy will protect you from having to pay the rest of the cost.
For Example:
If you have property damage liability limits of $250,000 on your auto insurance policy, and you drive through someone’s house in an at-fault accident, your liability coverage will have to pay out. However, if the claim is $300,000 and you don’t have an umbrella policy, you will pay the other $50,000 out of pocket. With umbrella insurance, the rest of the cost of the claim will be covered.
Do I need an umbrella insurance policy?
This type of insurance is not necessary for every person. Think about whether you are likely to be sued. If you feel like you are at a high risk of a lawsuit, like if you own several rental properties or have a few territorial dogs, you may need to invest in an umbrella policy.
Another thing to consider is whether you could afford to get sued or reach your liability limits. Do you have the money to cover the costs, including court fees, of a lawsuit?
Now that you understand umbrella insurance, you can make an informed decision on whether or not you need it. If you are unsure, or if you want to start a quote, you can call an Infinity agent at 1-800-INFINITY.