The Concklin Blog
Personal Umbrella Insurance
Personal Umbrella Insurance is a type of liability coverage that will kick in if you find yourself liable for a claim larger than your homeowners insurance, personal auto insurance, or boat insurance policy will cover.
This policy extends to cover your family or others in your household. However, different companies may have different parameters for who is covered, so make sure you discuss this with your agent.
Personal Umbrella policies also cover certain liability claims your other policies might not, such as slander and libel. Plus the incident does not need to involve your property or vehicle for coverage to kick in.
Umbrella policies tend to be less expensive compared to the cost of other policies.
How does it work?
Here are some examples of how a Personal Umbrella Policy would offer coverage:
- Your teenager causes an accident which results in 3 cars being damaged and several people being injured. Your auto policy would cover the damages and medical bills, but your limits are only enough to cover one vehicle and a couple of the bills.
- You prepare potato salad for a block party in your neighborhood. Several of your neighbors get food poisoning and decide the potato salad is to blame and bring a lawsuit against you.
- You host a large party at your house. One of your guests gets arrested on the way home for driving under the influence. You get sued.
- Your dog gets out of your yard and attacks a dog being walked by one of your neighbors. The confrontation results in injuries to your neighbor and their pet. They decide to sue you to cover medical bills, lost wages and for pain and suffering. The amount exceeds your homeowners policy limits.
Do I need it?
That is a hard question to answer. Many people would say yes because it seems someone is also looking to sue someone else over the slightest infractions. You can find an unending flood of horror stories of people being sued and financially ruined as a result.
However, the true answer is it is up to you and how comfortable you are with the financial protections you already have in place. Some people are more likely to need a policy than others. If you engage in risky behaviors that put you at higher risk of incurring excess liability than you should strongly consider it. It is also recommended you get an umbrella policy if you have a trampoline, pool, hot tub or other attractive nuisance. Having teenagers also puts you at an increased risk, as does owning a dog.
Discuss your risks with your agent. We will help you come to a solution that is right for your peace of mind.
How much does it cost?
Like any policy the price will depend on how much coverage you purchase. Where you live will also be a factor as rates can vary by state. Plus the risk insuring you present. If you have a large family with multiple teenagers, 2 dogs and a pool with no fence - you are a higher risk than someone who has a toddler and no pets and a fenced yard.
However, umbrella insurance tends to be very affordable, especially when you see how much coverage it provides. Most $1 million policies cost an average of $150-$300 a year. Want 2$ million in coverage? Tack on about another $75 per year. $3 million? That could cost as little as another $50 a year.
Why does it cost so little? Because you already have coverage in the form of your homeowners and auto insurance policies. These policies must be exhausted before an Umbrella policy will kick in. Plus you might have to carry the maximum liability coverage available for these policies before you can purchase an umbrella policy.
What doesn't it cover?
Similar to all liability policies, Personal Umbrella policies typically don't cover:
- Damage to your own property
- Intentional damage - or things you did on purpose such as pushing someone and causing them to fall and become injured.
- Commercial, business or professional activities - you'll need a business liability policy
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