What is Personal Umbrella Insurance?
Most people have standard insurance policies to protect their personal assets, like homeowners, auto, and life insurance. However, these coverages do not account for the many sudden things that can happen over the course of your life. Accidents happen, people make mistakes, and sometimes there are major costs associated with these unforeseen events. Fortunately, you can add personal umbrella insurance to supplement your other policies and add an extra layer of protection to your assets.
Personal umbrella insurance kicks in when your liability coverage on other policies is exhausted. For example, if you were to be involved in an automobile accident, you could be responsible for damages and/or injuries. Your umbrella policy will cover resulting liability that exceeds the amount covered by your existing standard policies. Personal umbrella policies can also be written to account for damages associated with events not covered by your other policies.
What Does it Cover?
Umbrella insurance can be broken down into three major categories:
- Bodily Injury – Covering the cost of injuries to another person, bodily injury liability coverage can account for the cost of medical expenses and liability claims results from injuries to other people due to a car accident in which the policyholder is at fault or a pet belonging to the policyholder. It may also cover injuries sustained by a guest while inside the policyholder’s home.
- Property Damage – This coverage accounts for damage to or loss of a person’s physical property for which the policyholder or their dependent is at fault.
- Personal Liability – When a policyholder is sued for things like slander, mental anguish, libel, or false arrest, personal liability umbrella insurance can cover fees and damages.
Examples of Claims That Require Umbrella Insurance
Legal Defense
If someone sues you, you will probably have to pay for court-related fees and costs, in addition to an attorney. These costs add up fast, so it’s important to have umbrella coverage in place to cover these fees and even help pay for liability expenses you owe.
Dog Bites
If your dog bites anther dog or another person, you could end up on the hook for tens of thousands of dollars-worth of medical expenses, lost wages, and pain and suffering costs. You can use your umbrella insurance to cover any costs for which you are found responsible.
Injury on Your Property
If someone slips and falls or injures themself some other way while at your home, they could potentially sue you. Accidents happen all of the time, and umbrella insurance is an important part of being prepared to protect yourself.
Teenage Drivers
Accident risk for drivers between 16 and 19 years old is about 3x higher than average, and teens account for about 8-10% of fatal crashes each year. If you have a teenage driver on your auto insurance policy, you will probably want to add umbrella coverage in case they cause a costly accident. Your regular auto policy may not cover enough of the damages that a high-risk driver could potentially cause.
Libel or Slander
A lawsuit for libel or slander could end up costing you a fortune in legal fees. Even if it seems unlikely, it is best to have protection in place should someone attempt to bring a case against you and seek damages.
Intoxicated Guests
If you host a party at your house or have a few friends over and someone drinks too much, you could be liable for damages he or she incurs in a car accident. Their attorney could claim that you overserved them or acted irresponsibly by allowing them to leave. Umbrella coverage helps protect against expenses that might occur as a result.
What Doesn’t It Cover?
Generally, umbrella insurance applies to liability. That means that it covers situations in which you are at fault or could be found legally to be at fault. It also does not cover your own costs. It helps to cover expenses if you are sued for damages and are legally charged. Personal umbrella insurance does not include:
- Your own injuries
- Criminal acts
- Damage to your belongings
- Intentional act
- Property damage or injuries in certain scenarios
- Injury to others for which your business is liable
What is Umbrella Drop Down Coverage?
Drop down coverage takes the place of another policy when it has been exhausted and cannot be used to cover a loss or damage. It covers the same risk as the policy. Drop down coverage is a feature of umbrella insurance. This coverage will “drop down” over exhausted aggregate limits so that policyholders won’t end up on the hook for large fees and fines despite having umbrella insurance coverage. It’s a good idea for anyone with personal umbrella insurance to fortify their policy with drop down coverage in case of an especially large claim.
Who Needs It?
Virtually anyone can benefit from supplementing their existing insurance policies with umbrella coverage. While they are not totally necessary or required, like an auto policy, they can be extremely helpful when it comes to unforeseen events and high-risk situations. For example, a person who owns a home could, at any time, be sued by a guest who is injured on the property. A person with a teenage child could end up liable for hundreds of thousands of dollars in medical, property damage, and legal expenses if that child causes an accident. In other words, anything can happen. It is best to be as prepared as possible when it comes to protecting yourself, your home, and your assets. Personal umbrella coverage accounts for those sudden accidents and surprising situations you never saw coming. It provides an extra layer of protection for your general insurance policies and affords policyholders peace of mind.
Contact us
If you are interested in personal umbrella insurance coverage, call 888-9OSPREY (888-967-7739) today or visit our insurance shop. Our underwriters can help design the best policy for your specific needs.