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“Mind the Gap” – How Umbrella Insurance Works

“Mind the Gap” – How Umbrella Insurance Works

Posted on: September 12th, 2020

Think you’re completely covered with liability insurance? Not always. Most personal property & casualty insurance includes liability coverage to protect you as the policyholder if you cause harm to a third party. Still, liability protection has its limits. There is no guarantee that it will fully cover the cost of a claim. Ensuring those gaps in coverage don’t leave you exposed is how personal umbrella insurance works.

In general, personal umbrella liability insurance safeguards you from:

  • Injuries you cause in a car accident
  • Injuries someone suffers on your property
  • Property damage you cause in an accident
  • Property damage your pet causes
  • Property damage a dependent or child causes
  • Attorney fees and other legal costs if you’re sued

What is Personal Umbrella Liability Insurance?

When you carry liability insurance, you have a way to pay for other peoples’ damage when it is your fault. Typically, policyholders opt for the maximum coverage. That still doesn’t mean it will cover someone’s full claim.

Suppose that your car insurance pays out a maximum of $100,000 for bodily injury liability claims. However, you cause a wreck that injures four people in another vehicle. They attempt to claim $250,000 in medical costs on your liability policy. What to do about the $150,000 difference? Umbrella coverage is there to help.

Your homeowner’s policy may provide these same protections, but your umbrella policy kicks in if those limits are exhausted. It also can cover you when you travel, including overseas. Most importantly—should you be sued for a large amount, your standard home or auto policy may not be enough to cover the damages the plaintiff is asking for, and you could risk losing everything without an umbrella policy.

Umbrella Insurance Protects Future Earnings

Even if you don’t have an abundance of assets now, personal umbrella liability can protect future earnings.

So, whether you cause an accident, your dog bites a neighbor, or someone is injured on your property, umbrella insurance offers additional security beyond what your standard liability insurance can cover. Rates and coverages will vary, but policies in general provide at least $1 million in excess coverage, even at their lowest limits.

Personal umbrella coverage can be one of the smartest additions to a comprehensive insurance plan. To qualify, you often need to carry the highest liability limits on your standard policies. Let’s talk about how an umbrella policy can help “mind the gap” and add real peace of mind.

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