An Umbrella Policy provides liability coverage above and beyond your first line of legal defense, which is usually your homeowners and/or auto policy. These both offer liability coverage to protect you against the cost of a lawsuit. The umbrella policy provides additional levels of insurance in case something really bad happens and the lawsuit is big.
If a guest is at your house and is injured, you may be sued for damages including medical expenses, pain and suffering, loss of earnings and other damages. Your homeowners policy (Part E. Personal Liability) will typically cover you for up to $300,000 or $500,000. If you are sued for more than your coverage amounts, you become personally responsible for the difference.
An umbrella policy protects you in these bad case scenarios by adding an additional layer of coverage that sits on top of the underlying home or auto limits. Umbrella policies can be bought in amounts of $1M, $2M, $3M, $5M, $10M, and even greater. Relatively speaking, they’re not expensive.
To purchase an umbrella policy you must have sufficient underlying limits on your home and auto policies first. For the homeowners insurance you generally need a minimum of $300,000 under Part E. For your auto insurance, most carriers require at least $250,000 per person and $500,000 per accident in Optional Bodily Injury coverage (Part 5). Different companies have different underlying requirements, so coordinating these properly is important.
Umbrella policies vary in price depending on several factors: how many homes you own; how many cars you have; number of drivers in your household; any youthful drivers; driving records; and any owned watercraft. The price can be as low as $150 and the umbrella policy might be written as a stand-alone policy or added to your homeowners policy. Whenever possible, it’s best to have all these policies with the same insurance company. Given a complicated accident where you exceed those underlying policy amounts, you don’t want to switch defense teams mid-stream if the insurance carriers are different.
If you own a second home, a business, any rental properties, or other substantial assets, it is particularly important that you have an umbrella policy. With assets like these, you're perceived to have a deep pocket and you have multiple exposures that could result in a claim. Lawsuits are on the rise in the United States, and so are your odds of being named a defendant. It is wise to protect yourself with this extra layer of coverage.
Call the Gordon Atlantic Insurance professionals to discuss a personal umbrella further by calling us toll free at 1-800-649-3252. Prefer to type versus talk? Click below!