Your agent may have brought up umbrella insurance as an option during a recent appointment, but if you’re not aware of what it is and how it works, you may have passed on adding it to your existing coverage. In this blog, we will explore the concept of umbrella insurance and its benefits.

What is Umbrella Insurance?

Umbrella insurance can help provide you with extra protection for your assets in the event someone decides to bring a lawsuit against you for something that happened on your property or if you unintentionally caused an injury to a third party. This additional coverage acts as a safeguard when your existing liability coverage reaches its limits.

Protection against Lawsuits

While personal liability coverage can protect you in part by covering losses due to such claims, there are typically limits to such payouts. A judgment against you could exceed these limits, especially if the injured party seeks reparations for emotional distress in addition to physical injury. This is where umbrella insurance comes in.

Increased Liability for Business Owners

If you own a business, your liability can increase, making umbrella insurance an even better idea. An umbrella policy can shield you from the fallout if a bogus or irresponsible lawsuit is filed against you, and prevent you from losing valuable property due to a judgment. Once limits from personal liability insurance are exceeded, a judgment could require you to liquidate assets to pay the rest of the owed amount to the injured party. The judge could even allow the plaintiff to garnish your future earnings.

Secondary Coverage and Legal Protection

With an umbrella insurance policy, secondary coverage kicks in after the limits of your liability policy are exceeded. In addition to providing financial protection, a typical umbrella policy can also allow you to fight back against a bogus lawsuit. It would either pay your lawyer’s fees if you win or cover both your legal fees and the outstanding judgment amount if you lose.

Who Should Consider Umbrella Insurance?

An umbrella policy typically costs very little per year to add to your other insurance coverage and can protect you if you own anything of value. Consider purchasing an umbrella policy if you:

1. Own your own home and/or secondary homes as vacation homes or rentals
2. Own or rent vehicles, including cars, trucks, boats, or farming or industrial equipment
3. Own a dog (particularly restricted breeds) or any type of dangerous pet
4. Volunteer with any type of organization or coach youth sports
5. Frequently host guests at your home (especially friends of your children if you are a parent)
6. Work in a field that includes talking about other people or businesses
7. Engage in activities during which you might accidentally injure someone else

The Cost of Coverage

A million dollars’ worth of coverage in the form of an umbrella policy could cost you an insignificant sum each month. Therefore, it is worthwhile to ask your agent if umbrella insurance could be a good option for you. The peace of mind alone could be well worth the premium.