Umbrella Insurance: What You Should Know Before You Buy

You should know a few simple facts before getting an umbrella insurance policy.

What Umbrella Insurance is

Umbrella insurance is boosted liability coverage. Your standard homeowners and auto insurance policy will cover accidents that happen to someone on your property if they decide to take legal action, but this coverage has its limits. As the name implies, umbrella insurance extends coverage over everything, so you don’t have to worry about paying many legal, medical, or repair costs.

Umbrella insurance has coverage starting at $1 million and as high as $10 million and will also cover more forms of liability such as libel and slander for your home, vehicle, and other property.

What it Covers

Umbrella insurance covers accidents on your property that you’re held liable for. Say you have a pool, someone trips on a crack in the deck, and they decide to hold you accountable. Your home insurance would only cover a portion of this — umbrella insurance would likely cover all of it. More specifically, it covers:

  • False arrest
  • Liability over auto/home insurance limits
  • Liabilities when traveling overseas
  • Libel and slander
  • Legal defense costs for covered losses
  • Malicious prosecution
  • Personal psychological harm and mental anguish

People buy umbrella insurance because it applies to a broader range of situations than a normal home or auto insurance policy to avoid serious financial loss.

Keep in mind that an umbrella policy does not cover:

  • Any liability that you have assumed through a contract
  • Property damage/injuries you cause while performing business or professional activities
  • Property damage/injuries you intentionally cause to others

How Much it Costs

A $1 million umbrella insurance policy will cost between $150 and $300 annually. As coverage increases, the annual cost increases by about $50 to $75 per year. It is considered supplemental insurance, complementary to your primary home, auto, and other insurance policies. So, it is very affordable.

Who Needs Umbrella Insurance?

Before buying umbrella insurance, you need to know if you need it. Typically, people with a high net worth or those who want to protect future earnings have umbrella insurance.

You should also assess your assets to know how much coverage you need. Equity, personal savings, brokerage accounts, retirement accounts, and other assets shouldn’t go above your homeowners or auto insurance policies — if they do, you may be in the market for umbrella insurance.

Understand the Ins-and-Outs with All Things Insurance

All Things Insurance does the work to get you your best coverage. To learn more, call us at (763) 645-5450.