An umbrella insurance policy, also referred to as excess liability insurance, is a policy designed to protect you from major claims and lawsuits. It’s extra liability insurance that covers homes and vehicles and provides coverage for claims that may be excluded by other types of liability policies.
An umbrella policy extends your already existing coverage. Here’s an example: you purchased an automobile liability policy that covers up to $100K for each accident. You have an at-fault auto liability claim worth $200K which exceeds the automobile policy limit; however, you also purchased an umbrella policy that covers up to $100K in damages.
The at-fault automobile claim can be covered using both your liability policy limit and your umbrella policy limit if you purchased the umbrella policy to extend the coverage you purchased for an automobile liability policy. The umbrella policy has to be purchased and assigned to auto, home, business, etc.
An umbrella liability policy can cover multiple homes/properties and vehicles depending on the coverage selected. This isn’t a stand-alone policy, and that’s why it is known as a secondary policy. This policy provides added liability protection for lawsuits and claims that filed against you. Basically, it’s an affordable way to protect your financial future and/or assets.
An umbrella policy offers protections like:
Lawsuit/court fees that arise from an auto accident, property damage, injury.
Damage to your neighbors’ property from the tree that you cut down- that fell into their yard- breaking a window, damaging the fence, and landing on the hood of the car on the way down.
Medical bills/ medical treatment for the injured party.
Lost wages because the injured party cannot work due to injury.
The cost of an umbrella policy:
Depends on the state.
Depends on the amount of coverage needed.
Depends on the policy it is being added to (auto/home/business).
Things to consider when deciding to purchase an umbrella policy:
The assets that you are trying to protect
The value of those assets.
The risks you face: commute, house parties/events, business risks, etc.
Financial situation current and future.
Points of discussion with your insurance agent regarding an umbrella policy:
Discuss all properties and assets.
Discuss your current insurance coverage: carrier, policy types, and policy limits.
Anything regarding your financial future.
Potential umbrella policy restrictions:
There are some insurance carriers that require that all insurance policies: home, auto, business- be with their company- in order for policyholders to purchase an umbrella policy from their company.
Umbrella Insurance is for Everyone
If a serious accident should happen that is your fault, having enough liability coverage from your current policies to cover your costs for negligence. No one can predict how much damage will result from an accident and how much a judge may award the injured party. An umbrella insurance policy is needed protection for every policyholder.
About Travis Etheridge
Travis, the co-owner of The Insurance Alliance, joined the insurance industry in 2011. He is married to his lovely wife Anica, and has an amazing son Henry. Travis is passionate about helping people, so the insurance industry is a natural fit. The thing he loves most about the industry is being there for his clients at their most trying times. He believes everyone is an individual and they deserve an individual plan best suited for their situation.