An umbrella policy provides extra liability coverage that covers claims that exceed your home or auto insurance policy limits. This insurance can also cover certain liability claims that aren’t covered by homeowners or car insurance, such as libel, slander, attorney fees, and other legal expenses in the event of a lawsuit.
Do I need an umbrella policy?
Deciding whether you need an umbrella policy begins with assessing your risk. Factors that put you at increased risk include owning a trampoline or pool, engaging in sports that could injure others, having a teenage driver, owning rental property, having a long commute during rush hour, or even owning a dog. Ultimately, an umbrella policy offers extra peace of mind by providing coverage beyond the policy limits of your current policies.
What can an umbrella policy cover?
Umbrella insurance can protect you in the event of liabilities that occur off your property, don’t involve your vehicle, or exceed the coverage limits of your current insurance policies. For example, dog bites account for a large percentage of liability claims, so it’s important to know what your homeowners policy will and will not cover if you have a dog.
If a guest is injured at your home, an umbrella policy can cover the medical claims of your guest. It can also cover other accidents that occur because of you or your family’s actions, such as texting and driving or accidentally injuring another person while skiing. Umbrella insurance will also provide legal representation and other expenses if a lawsuit is brought against you for liability claims.
How does umbrella insurance work?
Umbrella insurance kicks in when you’ve reached the liability limit on your homeowners or auto insurance policy. For example, suppose your homeowners policy has a personal liability limit of $300,000. Imagine hosting a party, and a guest falls on your stairs because of a loose handrail. This person then ends up with some injuries due to the fall and sues you to cover medical bills. If the court awarded this person $800,000, you would have to pay the $500,000 over your homeowners policy limits.
However, in this scenario, an umbrella policy would cover the cost of legal representation and the additional $500,000 that the homeowners policy did not. This protects your assets and future earnings. Umbrella insurance can help give you peace of mind, particularly in the face of potential lawsuits where the outcome is unknown.
What does an umbrella policy cost?
The premium for umbrella insurance can vary depending upon the amount of coverage you purchase, the state you live in, and other factors. However, an umbrella policy is typically an affordable investment. The Insurance Information Institute reports that most policies with $1 million in coverage cost between $150 and $300 per year, and each additional $1 million in coverage will cost another $50 to $75 per year. Bundling an umbrella policy with your home or auto insurance policies may reduce cost, so be sure to talk to your Westwood agent to learn more.
The bottom line
At Westwood, we’re happy to help you navigate the complexities of insurance so you can rest assured that you have the right coverage for your family and your circumstances. If you would like to learn more about umbrella insurance and how it can provide peace of mind and protect you from significant financial loss, contact us today or learn more about umbrella insurance and other insurance products here.
