Ever heard of Umbrella Insurance? No, it’s not for the one in your closet in case the wind blows it inside out. But it can help you on a rainy day.
So What is an Umbrella Policy?
Protecting your family and assets is a top priority, which is why people have insurance. Personal umbrella insurance is a type of insurance designed to add extra liability coverage over and above another insurance policy, such as auto or homeowners insurance.
Yes, You Need an Umbrella Policy
Umbrella insurance can benefit almost anyone. That’s because accidents that result in high costs can happen to anybody. An umbrella insurance policy can help prevent you from paying out of pocket for another person’s medical or legal bills if you’re found responsible. For instance, suppose you are found liable after a guest is injured while swimming in your pool or playing in your yard. Or, suppose you are found at fault for a car accident that injures another person. An umbrella insurance policy can help cover your resulting expenses in situations like this — up to your policy’s limit.
Umbrella insurance also typically extends to other members of your household, such as your spouse, children, and other relatives who live in your home and who do not have auto or property insurance in their name.
So, if your spouse causes a car accident or your teen is sued for posting a libelous comment online, your umbrella insurance policy may help protect them, as well.
How it Works
Here’s an example of how a personal umbrella policy works: If you’re at fault in a car accident that injures another driver, your regular auto insurance may cover the other driver up to the limit you selected, say $250,000. But, what happens if that limit is not enough to cover the other driver’s resulting medical bills?
If the other driver’s injuries are severe, you may be legally responsible for damages beyond the $250,000 your car insurance policy covers. And, if he sues you, your assets could be at stake. Imagine if that injured driver were a surgeon or another highly paid professional. What if the accident you caused resulted in an injury that kept him from doing his job for six months? Suddenly, he’s suing you for $1 million to cover the six months he’s away from work.
Your auto policy’s liability coverage may pay for up to $250,000, but where would you come up with the remaining $750,000? A personal umbrella policy can help cover the additional costs when your standard insurance policy isn’t enough. An umbrella policy could provide the additional coverage you need so that you don’t get stuck trying to pay the remaining balance yourself. This extra policy could help protect your bank account, home, and other personal property.
In most cases, personal umbrella policies are available in million-dollar increments, from $1 million to $5 million. While an umbrella policy is not required, it may offer increased protection in the unfortunate event of an accident.
Umbrella Policies are Not Just for Personal Use
Business owners can benefit from an umbrella policy as well. In Connecticut, if you have an excess liability policy or an umbrella policy, your chances of weathering the storm—or accident or lawsuit—are much better.
Excess liability insurance can extend the limits of a single underlying general liability, auto liability, employers’ liability, or liquor liability policy. It doesn’t offer any broader protections, but it will provide extra protection.
Give us a call today and we will walk you through how an umbrella policy can protect all the aspects of your life.