What is an Umbrella Policy?
An Umbrella Policy is an excess liability insurance policy that provides coverage above and beyond the liability limits provided under your auto policy, boat policy, renters or homeowners policy. An umbrella policy begins paying liability claims once the underlying homeowners, renters, auto or boat insurance policy limits are exhausted.
What’s Covered Under an Umbrella Policy?
Umbrella policies provide liability coverage, which is protection from claims being made against you by others. Liability claims can be bodily injury or property damage claims. Individuals making claims for their bodily injury can receive compensation for not only their medical bills but also their lost wages and their pain and suffering.
Injuries to others resulting from auto accidents, injuries occurring on your property (either at your personal residence or at rental units where you are the landlord), injuries occurring on your boat, and claims for slander and libel are all covered under an umbrella policy.
Here are some example scenarios for when your umbrella policy might come into play:
- You are in an auto accident and deemed to be ‘at-fault.’ The other party involved in the accident is a high paid financial manager who misses four months of work due to a complex fracture to his femur. He is claiming $500,000 in damages (medical bills, lost wages and pain and suffering), but your auto policy only provides coverage up to $250,000 per accident. Your umbrella policy can pay the remaining $250,000 in damages.
- A young girl playing in your yard is bitten by your dog, causing severe permanent facial scarring requiring cosmetic surgery. The child’s claim is valued at $350,000, but your homeowners policy only covers $300,000. Your umbrella policy can cover the additional $50,000 exposure.
- An elderly guest in your home slips and falls down the stairs, causing fractures to their pelvis, tibia and fibula. The injured guest is diabetic, which complicates the healing process and they undergo surgery and spend several months in an in-patient rehab facility. Their claim is valued at $475,000, but your renters policy only covers $300,000. Your umbrella policy can cover the additional $175,000 exposure.
Why do I need an Umbrella Policy?
Having an umbrella policy provides the peace of mind that your assets are protected in the event of a unexpected accident. Without the additional protection of an umbrella policy you could be personally responsible for paying for another person’s injuries in excess of your existing auto, boat, homeowners or renters policy limits. If all your assets (your rental properties, money in the bank, stocks, bonds and other assets) are worth more than the amount of liability coverage you currently carry, then you should consider protecting yourself with an umbrella policy. One of Webb Insurance Group’s knowledgeable Advisors can help you decide if an umbrella policy is right for you.