How Umbrella Insurance Works To Protect Your Family
Posted on Sep 17, 2020
Umbrella insurance is something you’ve probably heard of but may not fully understand. You may even believe it is something you don’t really need. Unfortunately, we live in a litigious society that is making it more and more difficult for people or families to manage without the financial protection umbrella insurance affords.
Here’s what you need to know about umbrella insurance so you can make informed decisions about whether you and your family need the protection it delivers.
What is Umbrella Insurance?
When you buy liability insurance for your home, vehicles, watercraft, RVs, motorcycles, etc. you get a limited dollar amount of protection. This protection helps to cover your legal fees as well as any judgments that are made against you.
Depending on the case, the legal fees alone can be crippling. If the judgment or settlement plus the legal fees exceed the limits of your liability insurance coverage, you and your family are left to pay the remaining fees out of pocket.
Unless you have umbrella insurance.
Umbrella insurance kicks in once your standard insurance protection is exhausted and pays the remaining balance you owe up to the limits of your umbrella policy. The great thing about umbrella insurance is that it isn’t for just one of your existing policies:
- Auto
- Home
- Recreational vehicle
- ATV
- Boat
Instead, it offers excess liability coverage for all these policies. You only need to purchase a single umbrella policy to provide additional protection for ALL your other personal liability policies.
Additionally, umbrella insurance offers protection for some events that aren’t covered by your general liability coverage elsewhere. These include things like slander and libel. With the rise of social media, these types of protection can be critical.
Who is Covered by Your Umbrella Insurance Policy?
Your umbrella insurance policy isn’t limited to a single person. Rather, it extends to all the members of your household. What this means is that you, your spouse, your dependents, and other relatives who are living with you are covered by your umbrella liability policy.
If there is any doubt about who or what is covered by your specific umbrella insurance policy, it is best to consult with your insurance agent.
What is Not Covered Under an Umbrella Insurance Policy?
While an umbrella insurance policy offers many benefits when it comes to covering the costs of injuries to people or damage to property, there are some things it simply doesn’t cover.
For instance, if you own a business, even if you operate that business from your home, your business is not protected by your personal umbrella insurance protection. You will need a separate business policy for that protection.
Also, umbrella insurance is a liability policy. It does not cover damage to your home, vehicle, or other possessions. It only addresses liability issues that are outlined within the policy.
The bottom line is that umbrella insurance serves as a sort of “boost” for your other liability insurance policies. It only kicks in when you need it because you’ve exhausted one of these other lines of liability defense and can help to save you and your family from certain financial disaster.
Does Umbrella Policy Cover Legal Fees?
You will be glad to know that like the other liability policies you have for your home, auto, etc., umbrella insurance also serves to help you pay your legal fees as well. At a time when legal fees can sometimes be greater than the settlements or judgments made against you, it provides greater peace of mind to know that you have that extra line of protection.
The hard part is deciding, in light of how costly a qualified legal defense can be, how much umbrella insurance you need. Working with an independent insurance agency, like Otterstedt Insurance Agency, can help you determine the amount of coverage you need to mitigate your risks best.
Is it Worth Having an Umbrella Policy?
It only takes one major accident to find yourself in deep water financially speaking. One chain reaction auto accident. One accidental drowning on your boat. One traumatic brain injury from an ATV. One moment can change your life forever when an accident becomes an albatross from which your family can never escape.
Umbrella insurance gives your family a financial boost to help mitigate judgments made against you. When juries make high judgments against you, an umbrella insurance policy can be the difference between a manageable loss and total devastation, financially speaking. It is absolutely worth having an umbrella policy for your financial protection and to protect the financial interests of those living under your roof.
