Why A Personal Umbrella Policy Matters

Owning property, driving a car or having a boat are among the scenarios that bring potential for a large liability loss.

Accidents involving common, everyday activities can happen to anyone, but some may result in a worst-case scenario: a large liability loss. You can encounter the possibility of a large liability loss just by owning a home, driving a car or leaving a negative review online. Being held legally liable for injury to another person or damage to their property could exhaust your home or personal auto policy liability limits and cause financial hardships for your family. A personal umbrella policy works hand in hand with your underlying insurance policy, adding a layer of liability limits to protect you.

An Example of How an Umbrella Policy Works:

Basic Policy - No Umbrella

• You get sued.
• You have $300,000 in liability coverage for the basic policy involved (auto or homeowners).
• You’re found liable for $1,000,000.
• The underlying policy pays $300,000.
• You’re on the hook for $700,000.

Basic Policy - With Umbrella

• You get sued.
• You have $300,000 in liability coverage for the basic policy involved (auto or homeowners) + a $1,000,000 umbrella policy.
• You’re found liable for $1,000,000.
• The underlying policy pays $300,000 and the umbrella policy kicks in, because the $300,000 underlying limit has been met and the umbrella pays $700,000.
• Your liability is satisfied.

In today’s litigious environment, any loss exposure can lead to a lawsuit, which could result in a large settlement or judgment with the potential to deplete an individual or family’s bank accounts, retirement savings or college funds. Even the threat of a lawsuit, or one that is ultimately dropped or found groundless, can be very expensive because of the cost of defending the suit. A personal umbrella liability policy protects your financial assets and can make the difference in your ability to meet your responsibility to reimburse others for their injury or damage.

Umbrella Insurance Coverage Benefits

A personal umbrella liability policy offers vital coverage benefits, and for a relatively inexpensive premium compared to the amount of coverage purchased. Talk to your local independent agent to find out how a personal umbrella allows you to obtain:

• protection for claims for losses not covered by an underlying policy
• worldwide coverage
• rental car, special events and liquor liability coverage
• coverage for libel, slander, defamation or invasion of privacy
• coverage for loss of earnings while settling a claim

Some optional coverages can be added to your umbrella policy:

• Employment Practices Liability Coverage
• Not for Profit Directors and Officers Liability Coverage (Not for profit organizations.)
• Excess Uninsured and Underinsured Motorist Coverage
• Uninsured/Underinsured Liability Coverage for non-auto related situations
• Pre- and Post Interest on Judgments

Speak to your independent insurance agent for more information on personal excess and liability coverages.

This loss control information is advisory only. The author assumes no responsibility for management or control of loss control activities. Not all exposures are identified in this article. Contact your local, independent insurance agent for coverage advice and policy service.