5 Facts That Help Explain Umbrella Insurance

A Personal Umbrella Liability Policy provides extra liability protection against catastrophic losses and associated lawsuits. In a large claim situation, this separate policy takes effect once the liability limits in other insurance sources, such as an Auto or Homeowners Policy, are exhausted, potentially saving you from substantial out-of-pocket expenses.

Despite this benefit, many people overlook the value of this insurance policy, thinking they will never need it, cannot afford it, or already have sufficient liability coverage through another underlying policy. These are some of the most common misconceptions about Umbrella Insurance that can leave a driver, homeowner, condo unit owner, renter, and rental property owner financially vulnerable. In light of recent personal liability claim trends such as nuclear verdicts, soaring medical and defense costs, and multimillion-dollar case settlements, it is smart for you to look into the facts about Umbrella Insurance.

Get The Facts About Five Common Umbrella Insurance Myths

No matter what insurance solution you are interested in, your local insurance professional is the best person to turn to for an explanation of coverage and help making an educated decision. After reading through the following myth-busting information about Umbrella Insurance, you may want to call your agent about adding this coverage sooner rather than later.

Myth #1: Only wealthy people need Umbrella Insurance.

The Facts: People in a variety of financial situations, from high-net-worth individuals to young professionals just starting out, can benefit from the protection Umbrella Coverage may provide if they are sued. Without it, homes, vehicles, financial investments, savings accounts, and retirement and rainy-day funds, as well as future income streams for decades to come, may be considered fair game in a settlement or judgment against you.

Myth #2: Umbrella Insurance covers low-probability events.

The Facts: The primary value of Umbrella Insurance is that it provides an added layer of protection against a range of common, everyday liability scenarios that can trigger a lawsuit and major financial losses, including:

• You are involved in an at-fault multivehicle crash that causes injuries and property damage.
• A guest injures themselves at your home or apartment due to a slip-and-fall or pool accident.
• Your dog hurts someone biting or jumping on them.
• Structural damage at your rental property leads to an injury to a tenant or their guest.
• A member of your household is accused of posting defamatory messages online.

Myth #3: Umbrella Insurance provides unnecessary liability coverage.

The Facts: Since Home and Auto Insurance Policies include liability coverage, many people assume they already have sufficient financial protection against bodily injury, property damage, or personal injury claims. However, even if you have selected the highest liability limits available, your coverage may fall short if legal action is taken against you for an at-fault multicar accident or a serious injury that happens on your property. In fact, defense costs alone, even for a claim found to be false, can quickly exceed your underlying policy’s coverage limit, leaving you to pay any remaining financial burdens, such as medical costs and jury awards, out of pocket.

Not only does an Umbrella Policy take effect after other insurance sources are exhausted, but it also may allow you to extend your personal liability coverage up to $5 million. In addition, it typically provides coverage for liability claims often excluded from other policies, such as false arrest, libel, slander, or an accident that occurs overseas or at a rental property you own.

Myth #4: Umbrella Insurance is not worth the expense.

The Facts: The ultimate cost of your policy premium will depend on the amount of coverage you and your insurance agent determine is appropriate for your individual situation and the risks that may make you more vulnerable to being sued. However, an Umbrella Policy is typically an extremely cost-effective way to safeguard your financial assets and secure peace of mind. An Umbrella Policy can be particularly worthwhile if you have any of the following common claim exposures:

• Own a swimming pool, trampoline, or hot tub
• Have a boat, motorcycle, or RV
• Entertain frequently at your home
• Own rental property
• Employ household staff
• Own a dog
• Have a teenager, especially if they are driving
• Serve as a board member, volunteer, or youth sports coach
• Have an active social media presence

Myth #5: Getting an Umbrella Policy is complicated and time consuming.

The Facts: Securing an Umbrella Insurance Policy can be simple—if you contact an insurance professional near you for help. One of the many benefits of working with a local independent agent is that they provide access to a wide range of coverage solutions and personalized service to assist you in selecting the right options. They can quickly assess your need for an Umbrella Policy by asking a few easy questions about your family, vehicles, properties, occupation, and lifestyle. These details will give them a clearer understanding of your potential liability exposures so they can recommend the appropriate coverage amount.

Learn More About Protecting Your Financial Assets With An Umbrella Policy

While an Umbrella Policy provides valuable and broad protection against liability claims that exceed the limits of your Home, Auto, Motorcycle, Recreational Vehicle, or Watercraft Insurance Policies, it does not cover all types of claims. Your insurance agent can walk you through the most common policy exclusions and identify any additional liability coverages you may require to make sure your financial assets, current and future, are fully protected.