Teen driver? Trampoline? Clients coming into your home? Rental property? You may need an Umbrella Policy
What is Umbrella Insurance?
Umbrella insurance is a type of personal liability insurance that can be indispensable when you find yourself liable for a claim larger than your homeowner’s insurance or auto insurance will cover. Umbrella insurance even covers certain liability claims those policies may not, such as libel, slander, and false imprisonment. And if you own rental property, umbrella insurance provides liability coverage beyond what your renter’s policy covers.
Umbrella insurance covers not just the policyholder, but also other members of their family or household. It also doesn’t have to involve your property or your vehicle for your umbrella insurance to cover it. You’re also covered worldwide; except for homes and cars you own under other countries’ laws.
Do You Need Umbrella Insurance?
Some people are more likely to need an umbrella policy than others. If you engage in some activity that puts you at greater risk of incurring excess liability, you’re a candidate for an umbrella policy. Personal liability risk factors include owning property, renting it out, employing household staff, having a trampoline or hot tub, hosting large parties, or being a well-known public figure.
Having a teenage driver in the family also puts you at increased risk, as does owning a dog or owning a home with a swimming pool. Basically, the more likely you are to be sued, the more strongly you should consider purchasing umbrella insurance. But anyone who is risk-averse will sleep better at night knowing they’re protected by an umbrella policy.
How Much Umbrella Insurance Do I Need and How Much Does It Cost?
As a general rule, you might hear you should purchase umbrella insurance if the total value of your assets, including ordinary checking and savings accounts, retirement and college savings and investment accounts, and home equity is greater than the limits of your auto or homeowner’s liability. The idea behind this advice is that you want to have enough liability insurance to fully cover your assets so you can’t lose them in a lawsuit.
The cost of an umbrella liability policy depends on how much coverage you purchase, the state where you live and the risk that insuring you presents to the insurance company. The more homes or cars you own, and the more household members your policy will cover, the more it will cost. But umbrella insurance is quite cheap compared to other types of insurance, especially considering how much coverage it provides.
Insurance is about protecting yourself, your family, and your assets. Umbrella insurance can help you do that.