What is Umbrella Insurance and Why Do I Need It?

What is umbrella insurance and how can it protect you? It helps shield you from very large, unexpected claims. Discover coverage benefits and when umbrella insurance is worth it.  

Understanding Umbrella Insurance

Umbrella insurance provides additional liability coverage beyond what your standard policies offer. This means that if you’re found responsible for an accident, injury, or property damage and the expenses exceed your insurance limits, your umbrella policy helps cover the rest. An umbrella policy can protect you from large or unexpected financial losses and can also cover certain claims that your primary policy might not, such as personal liability situations, certain lawsuits, injuries, and damage to property.

Who Needs Umbrella Insurance?

Insurance is expensive as it is. Many property owners don't want to consider taking out an additional policy unless it is absolutely necessary. That said, umbrella insurance can provide valuable protection against costly potential damages, and it's relatively inexpensive. There are some situations where it's a beneficial purchase.

For example, let's say a house guest suffers an injury at your home. Your homeowner's insurance will provide some personal liability coverage to help you pay for that person's medical bills. But what if your homeowner's insurance policy has a limit of $500,000, and the person's medical bills cost $750,000?

This is where that umbrella policy kicks in. Umbrella coverage takes effect after the limits of the underlying homeowner policy has been reached and can cover that outstanding cost of $250,000. How much the umbrella policy covers will depend on the coverage level you select.

Umbrella insurance is valuable for anyone who wants extra protection, especially if you:

• Own a swimming pool or trampoline
• Own a business
• Participate in adventurous activities, like skiing, surfing, or hunting
• Own investment properties
• Own a dog

In general, umbrella insurance is favored by those who consider themselves at greater risk for a lawsuit or accidental injury. For example, in the case of a dog, you as the owner are responsible in the event that the dog harms anyone. Umbrella insurance can help ensure that if that ever happened, you would have protection from potential lawsuits.

Umbrella Insurance Helps You Prepare for a Rainy Day

There are situations where a standard liability policy may not provide enough coverage. An umbrella policy allows you to protect yourself against major lawsuits in two ways:

• First, the umbrella provides excess liability over underlying coverage.
• Second, the umbrella provides liability coverage that may be excluded by your homeowner’s policies.

If you have additional questions about umbrella insurance policies, or if you're worried, you're not getting the coverage your policy was supposed to provide, get in touch with The Lane Law Firm. Our insurance dispute attorneys are here to help.