What is a personal "umbrella" insurance policy?

While sometimes offered as a rider, an umbrella insurance policy is often sold as a stand-alone policy. Most insurers who offer this coverage require increased liability limits under existing homeowner's or renter's and automobile insurance policies before offering this coverage.

An umbrella policy provides liability coverage over-and-above the coverage provided under your homeowner's, renter's or automobile insurance. This is commonly referred to as "second-tier" or "second layer" insurance since coverage kicks in only after you exhaust other coverage (provided by the first-tier of your homeowner’s or renter’s or automobile insurance). Second-tier policies save money in the long run. They have a lower premium because a large majority of incidents will be covered by your first-tier coverage. Also covers false arrest, libel, and slander.

It is not uncommon today for someone to purchase one million dollars or more of coverage under an umbrella insurance policy.

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Who should purchase personal umbrella coverage?

Historically, wealthy people with sizable assets have purchased personal umbrella coverage. This is no longer the case. Since our society has become more litigious, people of all income levels are choosing to extend their liability coverage. The greater your risk factors, the more you will need to protect yourself. Some high-risk factors include:

• Owning a personal watercraft
• Having a young driver in the family
• Owning a swimming pool
• Owning a recreational vehicle

How does it work?

Example:
Coverage: You have liability insurance on your auto policy for $100,000. You also have additional liability protection through umbrella coverage of $1,000,000.
Incident: On the way home from work, you run a red light and accidentally hit a biker. The biker is seriously injured and sues you for damages of $500,000. The court finds you liable for the full amount.
Result: The liability on your auto policy pays the first $100,000. Once depleted, your umbrella policy pays the final $400,000.

If you had not been protected with the additional liability coverage, you personally would have been responsible for the other $400,000 in claims against you.

Required Underlying Limits of Liability

An Umbrella policy can only be issued if liability limits on the policies it covers match or surpass the coverages below. Please note, below is only an average of what most companies require. Consult your agent about these limits

Email us with your specific requirements and we will provide you a no hassle quote.

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