When is Umbrella Insurance Necessary?

Your agent may have brought up umbrella insurance as an option during a recent appointment, but if you’re not aware of what it is and how it works, you may have passed on adding it to your existing coverage. 

Umbrella insurance can help provide you with extra protection for your assets in the event someone decides to bring a lawsuit against you for something that happened on your property, or if you unintentionally caused an injury to a third party. This could be an event like a porch floorboard collapsing under a guest in your home, or an accidental collision with a stranger on a subway platform, causing them injury. 

While personal liability coverage can protect you in part by covering losses due to such claims, there are typically limits to such payouts and a judgement against you could exceed them – especially if the injured party seeks reparations for emotional distress in addition to actual physical injury. If you own a business, your liability can increase, making umbrella insurance an even better idea. 

An umbrella policy can shield you from the fallout if a bogus or irresponsible lawsuit is filed against you, and prevent you from losing valuable property due to a judgement. Once limits from personal liability insurance are exceeded, a judgment could require you to liquidate assets in order to pay the rest of the amount owed to the injured party. The judge could even allow the plaintiff to garnish your future earnings.

With an umbrella insurance policy, secondary coverage kicks in after the limits of your liability policy are exceeded.  A typical umbrella policy can also allow you to fight back against a bogus lawsuit, and would either pay your lawyer’s fees if you win, or cover both your legal fees and the outstanding judgement amount if you lose. 

An umbrella policy typically costs very little per year to add to your other insurance coverage, and help can protect you if you own anything of value. If you have any kind of increased risk that could cause someone around you or your property to suffer an injury, such a policy is not just an option, but a recommended one. Your agent may strongly advise you to purchase an umbrella policy if:

• You own your own home and / or secondary homes as vacation homes or rentals
• You own or rent vehicles, including cars, trucks, boats, or farming or industrial equipment
• You own a dog (particularly restricted breeds) or any type of dangerous pet
• You volunteer with any type of organization, or coach youth sports
• You frequently hosts guests at your home (especially friends of your children if you are a parent)
• You work in a field that includes talking about other people or businesses
• You engage in activities during which you might accidentally injure someone else

A million dollars’ worth of coverage in the form of an umbrella policy could cost you an insignificant sum each month, so ask your agent if umbrella insurance could be a good option for you. The peace of mind alone could be well worth the premium.