You may be wondering what exactly umbrella insurance is and if it is really something you need.
A good way to view it is to ask yourself what would happen to your home, business, and family if you were sued for a significant liability charge?
This is when an umbrella policy is needed and can save your family from financial devastation.
Umbrella policies are one of the most
misunderstood types of insurance
What you need to understand is that an umbrella policy is not a “catch-all” policy that will cover everything your primary insurance doesn’t.
Umbrella policies provide two types of coverage: liability and defense costs. They potentially cover what primary insurance excludes and/or additional coverage beyond the limits set in your other policy.
So for example, if you’re found at fault or negligent for injury to another person or damage to their property, umbrella coverage can help pay for these liability-related costs. It provides excess liability for auto, homeowners, boat, and renters insurance.
Umbrella policies do not cover physical property damage. Damage to your own home or vehicle would not be covered by your umbrella insurance. If someone steals everything in your house or a hailstorm totals your car, that falls under your regular policy, not an umbrella policy.
Common claims that would fall under umbrella coverage
1. Cost of Defense
If you are sued by someone you will inevitably have lawyer fees and processing expenses. Umbrella coverage can step in to pay these fees as you defend yourself in court. If you are found at fault, the remainder of umbrella coverage not used for defense costs may then help pay for the liability expense you owe.
2. Teenage driver
Your teenager is so excited that they are finally on the road with their very own license. This is a wonderful thing and a rite of passage. It is also a good reason to get an umbrella policy. If you or your teen are in a serious accident and found at fault, having only your auto policy in place and no cushion could be a financial hardship for your family.
3. Inebriated Party Guest
If you host a get together at your home and one of your guests drinks, drives home and causes an accident on their way home you could be partially liable for the expenses associated. Unfortunately one of the most surprising and expensive liability claims people find themselves in is indirect liability. Umbrella coverage can help protect against this when your homeowners policy won’t.
4. Dog Aggression
You may find yourself one day out for a nice walk with your dog. Just like every other day you are strolling along, enjoying the view and suddenly another dog attacks your dog. During the fight your dog bites the other dog. He also bites the other owner who was trying to pull the dogs apart. If your dog bit first (even if he wasn’t the cause of the attack) you could be held responsible for medical expenses, lost wages, and even pain and suffering. These may not be covered by homeowners insurance, so umbrella coverage could step in to pay for the costs.
5. Homeowners liability
Putting an umbrella policy in place for your home and increase the liability limit for your home and property. Accidents happen even to the best of us. No matter how careful you are there is always a chance something can go wrong. When it does you are liable for the outcome. While usually these incidents are covered under your homeowners liability insurance, if the cost is greater than your limit an umbrella policy can provide the additional coverage you will need.
6. Pain and suffering
If you are found at-fault for an incident, you can also be sued for “pain and suffering” which is in addition to the person’s medical expenses. Pain and suffering is one of the costliest liability expenses and can be millions of dollars depending on the case. Having an umbrella policy of $1 million plus in place can help cover these costs if you were to ever incur them.
What it boils down to is that for the cost of a few cups of coffee a week you can have an umbrella policy in place to help protect your family from unexpected liability expenses including bodily injury, personal injury, loss of wages, pain and suffering, and defense costs.
If you would like to discuss what an umbrella policy would look like for you
please contact us at John Scott Insurance today.