Life is unpredictable; no matter how many precautions we take, accidents are sometimes unavoidable. That’s why we have liability insurance policies in place to protect us in emergencies. But what if the cost of an accident or lawsuit exceeds the liability coverage of your policy?
If that were the case, you would need a personal umbrella policy. Umbrella insurance is a type of personal liability insurance that helps cover claims in excess of your regular policy limit. In this blog, we will take a deeper dive into how umbrella insurance works and how it can help keep you protected from financial loss.
How an Umbrella Policy Works
Umbrella insurance works by extending limits on existing auto or homeowner’s liability policies. Auto and homeowners insurance is typically purchased with limits no higher than $300,000 to $500,000, depending on your plan and insurer.
If you were to lose a lawsuit exceeding your limit, it would put your savings and assets at risk. That’s where personal umbrella insurance can keep you protected. Personal umbrella policies usually start at $1 million and are able to reach up to $10 million in coverage.
This provides a much stronger level of protection against potential claims or accidents that are sometimes out of your control.
What is Covered?
Umbrella insurance covers a wide range of incidents, many of which are not covered by typical insurance policies. Also, members of your household such as your spouse and children are covered under an umbrella policy as well.
Here are some of the most common problems that umbrella insurance helps cover:
- Liability in excess of a home/auto insurance limit
- Bodily injuries to others
- Property damage to others
- Legal costs to defend you in a lawsuit
- Lawsuits such as defamation, libel, slander, or invasion of privacy
- False arrest
- Liabilities when traveling overseas
The main benefit of purchasing umbrella insurance is that it covers a broader range of incidents than your typical homeowner’s insurance or auto insurance. It’s especially important in protecting you from serious financial loss in case a lawsuit doesn’t go your way.
What Isn’t Covered?
It should be noted that umbrella insurance does NOT cover your own injuries or damage to your property. Other losses typically not covered by umbrella insurance include:
- Business losses
- Property damage or injuries caused intentionally by you
- Criminal activities caused by you
- Damage due to radiation, war, or terrorism
- Liability that you have assumed through another contract
Most umbrella policies do not cover your property damage, medical bills, or any of the incidents listed above. Additionally, some umbrella policies exclude damage or injuries caused by certain dog breeds or recreational vehicles, among other things. For specific coverage limits, talk to an insurance professional.
Get Extensive, Quality Coverage With COBIA Insurance
After reading through the principles of umbrella insurance, you may be wondering if an extra level of protection is right for you. Although navigating through the world of insurance may seem complicated, our team of experts at COBIA Insurance is here to help you explore your options.
We are committed to delivering extensive, quality coverage that fits all our client’s needs. With our help, you can find a policy that works for you. For more information on umbrella insurance or other related policies that we offer, please contact us today to set up an appointment.
