How does umbrella insurance work?
Umbrella insurance is a liability insurance that protects you & your family from third party claims. It adds an additional limit of insurance over top of the liability limits on your home and auto policies.
Umbrella insurance is a recommended necessity in today’s litigious world. Especially for families with children. An umbrella provides additional liability coverage in the event that your child or teen injures or bullies someone. If you have “toys” such as ATVs, golf carts, boats, motorcycles or dirt bikes, a pool, a trampoline, or any possession where there is an inherently increased risk, an umbrella is highly recommended. In addition, if you have accumulated a lot of wealth, own your own business, or who work in a field where you have a higher risk of punitive action, an umbrella is a must.
What does umbrella insurance cover?
It covers everything that isn’t specifically excluded. Umbrella policies are written to be the broadest level of coverage that you can get. There are even instances when your home or auto policy can deny a claim, and the umbrella can “drop down” and pay for the claim that was denied by the home or auto policy. This is how umbrella insurance got the name as it extends coverage beyond the liability limits of your home and auto policies.
Umbrella policies vs. excess policies
Umbrella policies, as previously discussed, are designed to provide additional liability protection for you and your family. There are two types of policies that do this, one is a traditional umbrella policy and the other is an excess policy.
Traditional umbrella policies both cover liability once your normal home or auto policy pays the most that it can, as well as it has the ability in some situations, to provide coverage in the event of a claim that was not covered by your home or auto policy. Because a traditional umbrella policy can also pay for claims not covered elsewhere, that makes it the preferred type of policy and what most people currently have.
Excess policies will only provide additional liability coverage if your home or auto policy paid the most they could on a covered claim. Excess policies will not pay if the home or auto did pay.
Be sure to review with your insurance agent if you have a traditional umbrella or excess to understand how your policy will respond in the event of a loss.
Do I have enough liability coverage in my auto insurance?
You can never know how much is enough. Buy as much as you can afford. Your insurance agent can only advise and recommend. Ultimately the decision is yours.
An umbrella policy is a cost-effective way to increase your coverage. In most cases you can get a million dollars of umbrella coverage for under a few hundred dollars. Keep in mind there are minimum liability coverage limits which your auto and home policies have to meet for you to qualify for an umbrella policy.
Personal Injury Protection (PIP) coverage
Personal Injury Protection (PIP) covers first-party claims. This is coverage for you or your household members if you are in an accident. If you have unlimited PIP coverage, your medical bills would be covered. See our no-fault auto insurance page to learn more. Your umbrella policy does not apply to PIP claims. Umbrella policies are a protection against third-party claims.
Bodily Injury (BI) coverage
Bodily Injury (BI) covers third-party liability claims. This covers liability if you or a household member causes harm or injury to another and that party takes legal action against you. Once your bodily injury coverage limit is met, your umbrella or excess policy would kick in. An umbrella policy may even cover claims your auto policy’s BI coverage would not.
Does umbrella insurance coverage include:
Cyberbullying
Yes, it can cover cyberbullying incidents. Certain insurance companies now limit their coverage options based on the age of the child and the amount of coverage. This would protect you and your household members against charges of cyberbullying or slander.
Swimming pools
Yes, however you can expect a possible increase in your insurance costs after the claim is paid.
Trampolines
Yes, however you can expect a possible increase in your insurance costs after the claim is paid.
Teen drivers
Yes, and this is a great reason to have umbrella insurance. Teen drivers or youthful drivers are more likely to be in accidents thus increasing your risk and a perfect example of why umbrella insurance is a necessity.
Dog bites
Having a dog is another great reason to have umbrella insurance. It’s important to disclose this to your insurance company, including the breed of your dog as policies can be rescinded or revoked if you don’t. You won’t necessarily be denied eligibility for having a dog, even a specific breed, although it can affect the cost.
Hobbies & careers
Do you enjoy skydiving, have your pilot’s license, or have especially high-risk holdings & properties? Do you own an aircraft, a boat, a motorhome, or a vacation home? These are some of the types of questions you will be asked about your profession and hobbies to see if you are eligible for an umbrella policy.
If you have a high income or especially valuable holdings, it can affect your rates and recommendations for coverage. Certain professions, such as those in the public eye can be seen as having increased risk for lawsuits due to their perceived assets.
The more you have to lose, the more important it is to have an umbrella policy. Protect your wealth and your assets with an umbrella policy.
How much umbrella insurance do I need?
This is not a one-size-fits-all type of umbrella policy, but $1 million to $5 million in coverage is common. It all depends on your individual level of risk and your assets.
Independent agencies like Doyle & Ogden Insurance Advisors can help you find the best coverage at the right price. We can also research cost-saving options for you, such as ways to bundle your umbrella coverage with your home or auto policies. Contact Doyle & Ogden Insurance for a quote today.
