You know the importance of homeowners insurance to cover your home and auto insurance to cover your vehicle but are you still a little foggy about umbrella insurance and why it is one of the most important and yet misunderstood policies?
Think for a moment about what would happen if you were involved in an incident of some kind and held responsible upon being sued for damages. What would happen to your home, business and family?
A personal umbrella policy will cover what your primary insurance excludes. It also provides additional coverage beyond the limits you have in that other policy for a variety of situations if you’re held responsible for bodily injury, property damage, or personal injury.
An umbrella policy can provide extra liability coverage for your auto, home, boat, and renters insurance. Typically, one umbrella policy can be applied to all if you already have the policies bundled.
What does an umbrella policy NOT cover?
Physical property damage is not covered, so if damage occurs to your personal home or auto it will not be covered with this policy. The reason is that your homeowners and auto insurance typically include specific riders for these occurrences.
What does personal umbrella insurance cover?
- Legal Defense Expenses
If you are involved in a lawsuit you typically have to pay legal fees and processing expenses. These costs can quickly add up. 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 already used may help pay for the associated liability expense you owe.
- Teenage Drivers
You are required to have auto insurance by law, but in the case of a serious accident where your driver is found at fault it may not be enough. Unfortunately, the crash risk is 3x higher for teenage drivers. Adding umbrella coverage boosts your auto liability limit to protect against increased risks.
- Indirect Liability
This would be the case if you were to host a party at your house and one of your guests drank too much and drove home. On the way he caused an accident and because he was coming from your house it could be argued that you over served him. This would open you up to being held partially liable for expenses. Many people are unaware this exists and are often taken by surprise with it.
- Dog bites
You take your dog out for a walk, and he gets in a fight with another dog. The other dog and owner get injured and if your dog bit first you could be held responsible for medical expenses, lost wages, and even pain and suffering.
- Homeowners liability
Umbrella coverage can raise your limit for the liability on your home and property as well. If you host a party and your friend’s child falls off the trampoline and gets hurt, or if a tree falls in your yard and hits your neighbors car are both incidents that may need a boost from umbrella coverage.
- Pain and suffering
If you are sued over an incident and found at-fault you can also be sued for “pain and suffering.” This is one of the costliest liability expenses.
Even when you are being kind and volunteering your time, if someone feels there was negligence on your part they can sue you personally for it. Note: Make sure all organizations you work with have some form of insurance.
Umbrella Insurance is a policy that is much needed and also very inexpensive to obtain. A typical one million dollar policy is only around $150 a year.
This is a policy that the team at John Scott Insurance is happy to discuss with you to ensure your family and your business assets are protected in the case of a significant claim that would otherwise destroy your finances.