Should I Add Umbrella Insurance To My Home Insurance Policy?

Home insurance can only cover you up to a certain extent. However, some may find that homeowners liability coverage falls short of their needs, and despite the hundreds of thousands it can cover in legal costs, the leftover out-of-pocket expenses may still be too burdensome to bear. Umbrella insurance was created to pick up where your liability coverage left off, sparing you a potential source of debt.

How Does Umbrella Insurance Work?

In order for umbrella insurance coverage to go into effect, the following series of events must happen:

  • A guest or stranger gets injured on your property
  • They file a lawsuit
  • You file a claim
  • You pay your homeowners coverage deductible
  • Your homeowners policy covers the legal costs up to its limits
  • Umbrella insurance takes care of the costs that would otherwise be left up to you

For example, the homeowners policy you have may only offer $200,000 in liability coverage. However, if you’re sued for $1 million, you’re left to cover the last $800,000. An umbrella policy could cover this amount in full, since it’s not unusual to find umbrella policies that offer $1 million in coverage.

What Is Not Covered Under Umbrella Insurance?

Since umbrella insurance is an extension of liability coverage, it only becomes active in situations where your standard liability coverage applies. Umbrella insurance does not cover anything by itself.

The limits of umbrella coverage are determined by the limits of your homeowners liability coverage. You won’t be covered in instances such as:

  • Damage you cause to your own property
  • Deliberately causing injury to your guest
  • Responsibilities you agree to assume as stated in your contract

Who Should Get Umbrella Insurance?

These policies are often ideal for those who are lawsuit targets, which could either be due to status in the community or the number of valuable assets one has. While those in high-earning professions are vulnerable (e.g. doctors, lawyers, business owners, etc.), individuals who take leadership roles such as volunteers or coaches (especially those coaching children’s sports) face the same likelihood of legal action.

It could also be argued that umbrella insurance is ideal for anyone. Regardless of who you are or the assets you have, there is no limit on how much a person can sue you for. For some, even $10,000 in out-of-pocket expenses could cause significant financial and emotional distress. Umbrella insurance is a lifesaver, no matter the level of income.

Get All The Insurance You Need

At All Things Insurance, we want you to get the umbrella coverage necessary so that you won’t be in a financial bind if a guest becomes injured in your home. We will help you push past the limits of your liability coverage, as there is no limit to the help we will provide for you. Call us today at (763) 645-5450.