What Is Under My Umbrella Insurance?

Aug 13, 2021 | Personal Insurance

Umbrella insurance is still one of the most confusing offers we have in the insurance market. A lot of hesitance due to price and inclusions in the policies. We are here to break it down for you in an attempt to make smarter decisions about your policy renewal or new insurances.

Personal Umbrella Insurances acts like a safety net but has always been disregarded. When have you ever needed an umbrella on a regular day? But when it’s extremely hot or raining, it’s the first thing we grab in our houses or our cars. Dependable, compact, and extremely valuable. That is how a Personal Umbrella Insurance works exactly like what its name entails. 

The Personal Umbrella Insurance acts as your additional protection, another layer of security that we all need. It is that additional coverage that you can use in case of an emergency that threatens your wealth and well-being. It can be applied to your personal, car, and house insurance.

WHAT’S IN IT FOR ME?

  1. Umbrella insurances act as a type of personal liability insurance that covers the claims that are excess of a regular homeowner, auto, or even watercraft policy coverage.
  2. An Umbrella Insurance will not just cover you as a primary policyholder but will cover all the members of the family and including the household. 
  3. It can also include insurance coverage for injuries to others, damage to their possessions
  4. Umbrella Policies are more affordable than the regular insurance policy.

Umbrella policies can cover any claims that other policies may not help you cover, such as slander, false imprisonment, and libel. It even covers malicious prosecution, invasion of privacy, and other libelous hazards.

MYTH BUSTER

We understand that there is hesitance in this type of policy once it was offered. Other companies under the Insurance Agency will tell you that you might require it because of people that don’t take lawsuits carefully or those people who are looking for quick claims and want to just sue you without basis. There are a few thousand reports across the United States about this, and if the victim does not play her/his cards right, might be fined millions upon millions of dollars that they have to pay. But what is the probability that you will be a part of this kind of scam? And do you really need umbrella insurance for these?

“As a rule of thumb, umbrella insurance would be offered to you if your personal bank account, retirement, and investment accounts and together with your home equity are larger than your auto and homeowner’s liability. This idea is created since you will have more dispensable finances that can cover your assets even if you lose a lawsuit.” — This doesn’t even make sense… Although, the insurance provider usually awards can exceed the insurance policy limits. Remember that everyone can be sued, so taking up Umbrella Insurance makes total sense. The actual question here is, how much are you willing to pay for your peace of mind?

But some people or families will benefit from this kind of policy more than others. If you and your family are always engaged with activities that put you and your family at risk of excess liability, you are advised to sign up for an umbrella insurance policy.

DO I NEED IT?

If you have a dog, a swimming pool, and a teenager who drives this puts you and your whole family at risk. One wrong slip around the mentioned above can merit a probable lawsuit, and the more strongly we believe that you should get Umbrella Insurance.

If you fall under this list, you should get an Umbrella Policy

  1. Homeowner or Property Owner
  2. Has a large amount of savings or other financial assets.
  3. If you are worried about international accidents.
  4. If you have Dogs, a swimming pool, a car, or anything that can lead to bodily injury caused by an accident.
  5. A public Figure.
    1. Like Vlogger
    2. Post product and services review
  6. You have a place that is being rented out.
  7. Frequently facilitates a big get together in your house

Weighing Things Out:

Below are a few of the pros and cons that you might want to look into.

Pro’sCon’s
Provides extra coverage and even legal defense once you hit your limits on your personal insuranceBuy a minimum amount for your car’s and/or house property insurance liability coverage before  you can add an umbrella coverage
Can cover incidents that your main insurance usually does not cover, like slander, libel, or false accusationsMust have existing main insurance such as property or homeowner insurance before you can qualify
Certain Umbrella Policy can cover international incidentsTotal premium cost may increase gradually 
Coverage starts at $1Million
Can cover Rental properties, like camper vans, boats, etc.

EXAMPLE OF CLAIMS UNDER UMBRELLA

Here are a few Case Files (Study) on How Umbrella Insurance Functions:

  1. Your son was in a fistfight in his school and the family sues you.
  2. You prepared and gave your son boxes of cookies that he can share at school.  But a few of the students got poisoned.
  3. You ran into a car accident and caused a 10 – car pile – up. While your personal car insurance coverage is not high enough to cover/replace all 10 victims’ cars. And unfortunately, your insurance can not cover their medical expenses too.
  4. House parties, however, were supervised or not. If your son decided to celebrate a party and one of his guests drowned in your pool. 
  5. Something like number 4, you invited your friends to some fun diving on your above-ground swimming pool, even as an adult you are still liable for a lawsuit if your friend accidentally broke something in your swimming pull that can cause permanent lifelong damage.
  6. Your daughter is earning an honest living by babysitting. But she accidentally left the baby on its walker. And the baby fell and had a bruise on its forehead. The family can sue you and your daughter for negligence and can be fined millions of dollars.

What does Umbrella Insurance Cover?

Sometimes called Personal Liability Insurance or Excess Liability, the Umbrella Insurance policy can not stand on its own. However, it helps and supplements other policies that most of the customers have already standing, like renter’s insurance, auto insurance, and/or homeowner’s insurance.

To protect you and your assets from any financial fallout because of unseen circumstances is the main purpose of an Umbrella Policy. In other words, if you get to a car or automobile accident or someone, unfortunately, met an accident inside your property, you might be held accountable and liable for any expenses due to damage and/or injuries. The Umbrella Policy is your safety net, in case your personal, car, or homeowners insurance policy fails to cover all the expenses.

A DRILL-DOWN

Here are more examples and a drill-down of what your Umbrella Policies can cover

  1. Your daughter tried protecting her classmate from a class bully, as she shoved her away the bully fell of a few flight stairs and broke something. 
    1. Bodily injuries liability can cover the cost of medical bills
  2. In the example that you caused a 10 – car pile – up. 
    1. Other so-called victims will place you at fault.
  3. The Party at your house – however, supervised or not.
    1. Family can file negligence causing a fall or any other accident.
  4. Personal Liabilities like – slander, libel, false arrest, or mental anguish

Primarily, at first glance, the statements above are somehow unclear, but the examples show four very broad categories that a lot of people can use against you. Accidents, Car/auto Problems, Bodily Harm, and even Mental Health due to wrong implications. Four critical things that the people around you can use against you. 

How Much of an Umbrella Policy Do I need?

It does pose as a scary thought, especially talking about extra payments. But if you are not afraid to shell out a few more hundreds of dollars for you and your family’s protection, then we highly suggest taking up one.

All you need to do is to; first total the amount of all of your assets, including your house and its built-in rooms, (garage or tools shed included), your personal savings, and even your investment accounts. Once you have your total net worth, look at your already existing policy if it is enough to cover all of it. If it does not cover the total amount of your net worth, you deduct the difference between the two, and then you’ll have a greater understanding of how much your Umbrella Policy should cover.

An Umbrella Policy with at least $1 Million coverage can cost from $150 to $350 per annum, this is according to the Insurance Information Institute. But with a higher coverage limit, this type of insurance will serve good value for its cost in general.

Before You Decide:

Safety has truly no price and your financial security will always be at risk. But it’s always better to be prepared and have something at your back as your last card. We at Team AIS believe that this type of insurances will help you safeéguard your life. After all, your life’s security is what really matters in the end.

If you are looking for the best independent insurance agent in Denver, Colorado who is familiar with the policies and coverages you need, give us a chance! Advantage Insurance Solutions is here to help! We can tailor your coverage to your specific needs. We can maximize protection while minimizing cost. We can also suggest ways that you can adjust your coverage to take advantage of discounts that insurers give for packaged policies. Call us now at 720-221-8168!