Personal Umbrella Insurance
In our daily lives, it's possible to cause harm to others due to personal negligence. In such cases, automobile-related incidents are generally covered under the liability portion of auto insurance policies, while most other incidents are covered under homeowners insurance liability.
However, there are instances when the scale of these accidents exceeds the coverage limits of auto or homeowners insurance. Here, umbrella insurance plays a vital role by offering additional coverage, compensating for the shortfall in the auto and home liability insurance limits. This is crucial for protecting an individual's financial stability against major lawsuits or unexpected accidents.
This article delves into the concept and role of umbrella insurance a bit more.
1, What is Umbrella Insurance?
Umbrella insurance is a policy that provides additional coverage over the basic liability limits of your existing insurance policies, such as auto, home, boat, rental property, RV, etc., under your name (Underlying Coverages).2, How Does Umbrella Insurance Apply?
-If the coverage limits of your auto or homeowners insurance are insufficient to cover damages, umbrella insurance can compensate up to the limits of the umbrella policy. For example, consider an auto accident caused by your fault that results in injury to others (including damage to another's vehicle) or an incident where your pet injures someone. If the liability coverage of your auto or home insurance does not fully cover medical or legal expenses resulting from the accident, umbrella insurance can provide additional compensation within its limits. Without umbrella insurance, insufficient coverage from your home or auto insurance could put your home, savings, and even future earnings at risk.
-Umbrella insurance also covers incidents not compensated by auto or home insurance, such as defamation, false arrest, slander, and libel. Nowadays, with active communication through social networks like Facebook, Instagram, and email, a family member might post or say something that defames another person or business. While these incidents are rare, umbrella insurance covers such situations if they occur.
3, What Incidents Does Umbrella Insurance Cover?
- Bodily Injury: Covers medical and legal expenses needed to compensate for physical injuries to others caused by your negligence.
- Property Damage: Compensates for damage to others' property, such as cars, due to your fault.
- Personal Injury: Covers lawsuits for defamation caused by false statements or comments about others.
- Landlord Liability: Covers incidents where tenants' negligence leads to injuries, holding the landlord responsible.
4, What Does Umbrella Insurance Not Cover? (Exclusion)
- Your Injury or Damage to Your Personal Property: Umbrella insurance does not cover your own injuries or damage to your property but compensates for injuries or damages you cause to others. Auto or home insurance will be utilized first before umbrella coverage applies.
- Business-Related Damages: Losses related to business activities are not covered. This includes businesses operated from home. Separate business and umbrella policies are needed for business-related coverage.
- Criminal and Intentional Actions, Contracts: Damage or injuries resulting from contractual work or intentional criminal acts are not covered.
5. How Much Does Umbrella Insurance Cost?
The cost varies based on individual driving records and credit scores, but for an average driver with two cars, the price for $1 million in umbrella coverage ranges from $200-$400 annually. Insurers also offer higher limits, such as $3 million or $5 million. Umbrella insurance premiums are relatively low because statistically, it's rare for incidents to exceed the limits of auto or home insurance. To qualify for umbrella insurance, your auto insurance liability must be at least $250,000/$500,000, and your homeowners insurance liability must be at least $300,000.
Separate umbrella policies are required for business needs. For quotes on personal or business umbrella insurance, inquiries can be made at 770-234-0606.
