Should I buy UM/UIM Coverage on My Personal Umbrella Policy?

Nov 16, 2021 | Personal Insurance

There are several types of insurance policies that you would need for your own protection. You should have homeowners insurance if you own a house. Plus, you need auto insurance if you have a car. You will at some point in your life need health insurance, life insurance, or disability insurance too. However, all of these have coverage limits that may force you to shell out money if you reach the limits. To avoid out-of-pocket expenses, you would need a policy that will serve as an extra layer of protection that is designed to protect your assets and savings from large liability claims. This is called the Personal Umbrella Policy. 


An unexpected event that causes injury or loss of life can create huge financial problems. If a visitor slipped in your driveway and banged his head which leads to a head injury, your homeowners’ insurance limit may not be able to cover the medical bills. If the family decides to sue you for negligence, you will face a huge liability claim that can drain your savings and assets. 

A personal umbrella policy is an extra protection that goes beyond your standard policy limits. If medical bills and legal fees will be greater than the policy limits of your home or auto insurance, an umbrella policy will be able to cover the extra cost without putting your personal funds at risk.         

It is important to note that umbrella policy covers injury to others or their property and possessions. It does not include coverage for yourself or your property. You will need another kind of coverage for yourself in case you receive injuries in an accident. 


When purchasing a personal umbrella policy, you have the option to get UM or UIM coverage. This is your protection if you get injuries or if your property is damaged in an accident. Let us first define each coverage to understand them better.


An uninsured motorist means that the other person you are in an accident with has no auto insurance. If that person crashes your car, you will be paying for your own car repair or medical bills if get injuries. The same thing will happen if you are a victim of a hit-and-run driver. You need to pay car damages and your injuries caused by them. 


Underinsured motorist means that the other person involved in the accident has car insurance but whose liability limits are too low to cover damages and injuries.  Most states only require the minimum amount of liability insurance and it may not be sufficient for the damage or bodily injury cost. 

What is part of UM and UIM?

Both coverages include:

  1. Uninsured/Underinsured Bodily Injury Coverage – pays for medical bills for you and your passengers if you are in an accident and the at-fault driver does not have insurance or not enough insurance to cover the bills. It also pays for pain and suffering and lost wages.  
  2. Uninsured/Underinsured Property Damage Coverage – pays for car damages if someone hits you and does not have insurance or not enough insurance to cover for car repairs or parts replacement. This can also extend to property damages like your driveway or fences. 


Let us put it this way. If you are buying all kinds of policies to avoid financial stress and pay for injuries of the people you are in an accident with, why not buy for yourself and your passengers to protect you from bodily injury and property damage as well? Claims are not just for other people. You can also make claims for your own injury if you purchased the right coverage. 

There is quite a number of motorists out there carrying no insurance at all. If they do, they only have the minimum liability limits to save on premium costs. If you want to make sure that you are protected both body and mind, you definitely need uninsured and underinsured motorist coverage in your umbrella insurance. 


It is a common misconception that umbrella insurance is just for the wealthy. Many people believe that if you have huge assets, several properties, and expensive possessions, you need more protection therefore you need more insurance. That is not true. If you are at fault in a car accident and the other driver and passengers all needed medical attention or worse, death, the bills will pile up. And if they decided to sue, you will be facing massive legal fees. You are not wealthy and you only have a few assets, so where will you get the money to pay for all your debts? They can go after your properties and other assets if you don’t have enough liability insurance. 

The benefits of getting extra protection are always advantageous. Here are some more perks that you will enjoy when you purchase an umbrella policy with UM and UIM coverage:

  1. It is inexpensive and can protect you against injury and property damage.
  2. Moreover, it can increase insurance coverage beyond the limits of your home and auto insurance. 
  3. It will provide coverage for legal expenses including defense costs and attorney fees.
  4. It will protect you from liabilities that are part of your home insurance such as:
    1. False arrest
    2. Slander
    3. Defamation of Character
    4. Wrongful eviction
    5. Invasion of Privacy


As with other insurance policies, there are exclusions in the coverage of umbrella insurance:

  1. Injury or property damage which is intended by the insured
  2. Business or professional activities
  3. Illegal activities
  4. Loss or damage due to war 
  5. Liability incurred through contractual agreements
  6. Injuries caused by the use of recreational vehicles


The rule of thumb is you buy enough umbrella insurance that will cover your total assets. Add everything up including your savings and retirement accounts. If it falls below $1,000,000, you can get the minimum which is $1 million as well. If you have more than a million in assets, you can consider a higher umbrella policy. They are sold in $1 million increments. 

It normally costs about $150 to $300 per year for a $1 million coverage. Add a few more dollars for uninsured and underinsured motorist coverage and you will only have to pay about $200 to $400 per year. 


If you own a car and drive it frequently, you need UM and UIM coverage. If you like walking or riding a bike, you also need this additional coverage. Other reasons are:

You have a teenager or a new driver in the family

There are a lot of teens and new drivers out on the road every day. The risk of motor vehicle crashes is high among teens 16-19 years old. About 80% of the accidents daily are caused by new and young drivers. This is the reason why you need extra coverage for you and your teen driver for protection. 

You live in a state with a high number of uninsured and underinsured motorists

According to the study by the Insurance Research Council, about one in eight motorists were uninsured in 2019 which is 12.6 percent of motorists. You will never know when you are in the midst of these uninsured and underinsured drivers so it is better to be protected well when you go out on the road.  

You have a high-value car

Having an expensive car means costly repairs. If your car crashes, the at-fault driver may not be able to cover the cost of repair. This is when you need UM and UIM coverage to make sure that your car will return to its original look. 

You cannot afford to pay for expenses associated with a car accident.

If you sustain injuries in a car accident and the other driver is without insurance or underinsured, and you cannot afford your own medical bills, UM and UIM coverage will help you get through your injuries. 

The need for umbrella insurance is clear. You need extra protection and what better way to ensure that than by purchasing insurance to shield you and your family from financial burden. The added uninsured and underinsured coverage is important because road accidents can happen unexpectedly. Whether you are driving, walking, or riding a bike, you are always exposed to the possibility of getting into an accident. You can never be too protected when it comes to road accidents. 

If you are looking to add umbrella insurance for your and your family’s protection, you can depend on Advantage Insurance Solutions (AIS) here in Denver, CO. Expert agents are available to explain and guide you in purchasing any of your insurance needs. Call us to know more about our services. 

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