Do You Need an Umbrella?

Umbrella insurance is designed to provide protection over and above your other policies that may have liability coverage attached to them such as your homeowner's insurance and automobile insurance. It is designed to add an additional layer of protection for your assets in the event that your negligence causes a claim that exceed the limits of one of those policies. Examples could include a multi-vehicle accident on the highway, or an outrageous jury verdict for someone that may have been injured on your property.

If you are negligent and cause injury or damage to others, the liability section of your homeowner's insurance or automobile insurance kicks in to protect you from any claims against you by affording money to pay damages on your behalf. Sometimes, the injury or damages are so great that your policy limits are exceeded. This happens most often with injury claims, especially if the injured party becomes permanently disabled. The umbrella policy will have its own stated limit that is much higher than the underlying coverage for your home or automobile and the umbrella policy is only triggered once the liability limits of the underlying policy are exhausted.

Umbrella policies are generally not very expensive as compared to other forms of insurance. You may find that an umbrella policy can be obtained for a fraction of the cost of your homeowner's insurance and automobile insurance.

The coverage afforded by an umbrella policy is broader than the coverage on your homeowner's insurance or automobile insurance as well. There are typically specified limits for bodily injury and property damage on both of those policies, with the limits for property damage being much lower than for bodily injury. An umbrella policy will cover bodily injury, property damage, and personal injury under one limit.

As with any insurance policy, intentional acts are not covered under a liability policy. An intentional act is different from an act of negligence because the results are unintended in an act of negligence. A case demonstrating this involves a person that shot another person with a gun. The shooter claimed that he did not mean to hit the person, just shoot towards the person. While this argument inevitably leads to other questions of fact for a jury, it does provide a quick overview of the concept of an "intentional act".

Umbrella policies will not cover punitive damages that are imposed by a court of law. This happens in cases where the negligence was so egregious as to warrant an additional punishment against the responsible party.

If you run a business, a personal umbrella policy will not cover your business activities. You will have to maintain a business liability policy for that.

Speak with your agent about your insurance needs before you buy an umbrella policy. You may find that an increase in the limits of your existing policy is adequate. Adequate liability coverage in any case is a wise investment to protect your assets.

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