What is Umbrella Coverage? Why would you need it?

An Umbrella policy gives you additional liability coverage which can function to fill gaps in your homeowners or auto policy, or to extend your coverage. But why do you need more liability coverage? 

The frequency and cost of lawsuits has increased dramatically in the last decade. Here are some real life examples: 

Internet Blogger:
The insured's daughter hated math as well as the teacher. The daughter made "disparaging" remarks about her teacher online. The teacher successfully sued the parents for $750,000.
Motorcycle Accident:
The insured collided with a motorcyclist, paralyzing the rider, who has successfully sued for $20 million to cover lifetime care expenses.
Faulty Furnace:
The insured's tenant claims she became ill from carbon monoxide poisoning resulting from a faulty furnace. The tenant claimed permanent brain damage and demanded $700,000.

When your primary policies reach their limits, the other party can legally go after your personal assets, including your retirement savings, to settle remaining costs until you declare bankruptcy. 

A personal umbrella policy covering one house and two vehicles may cost around $150 in annual premium for $1,000,000 of additional liability coverage. It's a small price to pay for peace of mind. 

We particularly suggest purchasing personal umbrella insurance if: 

  • Your assets are greater than your liability limits
  • You are financially responsible for children
  • You frequently host guests on your property
  • You have a swimming pool, boats, or off-road vehicles
  • You own rental or vacation properties
  • You participate in volunteer activities
  • You are employed and have continual income

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