Personal umbrella liability insurance can help you protect your assets from a liability claim. This type of coverage extends your liability protection taking over when your other policies are exhausted and providing coverage for things otherwise not covered. If you’re at risk for a lawsuit or have high-value assets an umbrella policy is a great idea.
We’re going to explain the ins and outs of personal umbrella liability insurance and hopefully address all of your questions to help you understand this coverage and determine if it’s right for you. You can always contact a broker if you’d like an umbrella liability insurance quote or want additional information.
What is umbrella liability insurance?
Umbrella liability insurance provides protection in the event that you’re sued once your other policies have reached their limits. All insurance policies have something known as a policy limit – this is the maximum amount that will be paid in the event of a claim . Once that limit is reached your insurance won’t be able to cover additional expenses. An umbrella policy can step in and help cover costs for liability claims.
For example let’s say someone gets hurt while visiting your home and sues you for damages like loss of income. The case is long and drawn out and your legal fees and settlement exhaust your home insurance liability coverage. Your umbrella policy would then take over to help cover the rest of those expenses.
What does a personal umbrella liability insurance policy cover?
Most home or car insurance policies have a limited amount of liability protection. The minimum for cars is $200 000 and the usual maximum for home and car liability coverage is $1-$2 million. An umbrella policy covers liability claims once this liability protection is exhausted. This includes your damages legal defence costs judgement awards and settlements. (A liability claim is normally made when you caused harm or damage accidentally or are accused of doing so like if you’re in a car accident or someone trips and falls at your home.)
A personal umbrella liability insurance policy an easy cost-effective way to increase your liability protection to $5 million. It may also offer broader coverage including things like libel and slander.
Exactly what’s covered will depend on the insurance company and your individual policy. Working with a broker is a great way to ensure you’re covered and that you understand your umbrella liability coverage.
Do I need an umbrella policy?
There are a few reasons for someone to get an umbrella policy such as:
- You own a lot of assets
- You have high-value assets
- Your liability coverage on other policies is low or limited
How much does personal umbrella liability insurance cost?
The cost of an umbrella policy depends on how much coverage you want and how risky you’re considered to be. Factors that impact the price of umbrella liability insurance include:
- Your insurance and claims history
- Where you live
- The value of your assets
- Your current and future income
- Your demographics
- Your other insurance protection
- Your coverage options
In order to save money on your umbrella insurance premiums it’s a good idea to purchase this coverage with the same provider as your home or auto insurance if they offer it. This is called bundling.
Some insurance companies will also offer discounts if you have mitigation measures.
How much umbrella liability insurance do I need?
Your coverage will depend on a few factors including:
- The coverage of your other insurance policies
- The value of your assets (this includes property investments and savings)
- Your income and potential income
- The risks you face
Personal vs. Business Umbrella Liability Insurance
A personal umbrella liability policy is designed for an individual or family and protects your personal assets if you’re held liable for damage once your other insurance policies have reached their limit of coverage.
A commercial umbrella policy is designed for businesses in order to extend protection once business liability policies are exhausted.
Personal Umbrella Liability vs. Excess Liability Insurance
Umbrella liability insurance is also called excess liability insurance. They are interchangeable although umbrella liability is the industry term.
If you have any questions about this coverage leave a comment below or talk to your broker.