You never know when a rain shower will catch you by surprise. The same way you keep an umbrella around ‘just in case,’ you should also keep an umbrella insurance policy around to help protect you from a sudden and unexpected liability – just in case. After all, lawsuits can be expensive, and without enough insurance coverage, you could face tens or even hundreds of thousands of dollars or more in out-of-pocket damages. Umbrella insurance helps shield you against major litigation, helping you to withstand a lawsuit and preserve your financial future.
What is Umbrella Insurance?
Umbrella insurance is more than just coverage for a rainy day; rather, it is extra protection that provides a broad umbrella over the many different types of liability risks you face as a homeowner, renter, driver, and in your regular day-to-day life. This coverage extends your liability protection on your primary insurance policies, increasing the amount the insurance company will pay for damages if you are sued for an incident for which you or another member of your household is at fault.
Most supplemental liability coverage starts at a minimum of $1 million in additional protection, although additional coverage may be available. This coverage pays in addition to your primary coverage up to the limits of your policy. This includes damages caused by things like:
- Collision liability
- Third-party property damages
- Injuries in your home
- Libel, slander, and defamation
- Accidental damages caused while traveling outside the U.S.
- Rental boat damages
- And more
How Umbrella Insurance Works
There are a number of ways in which umbrella insurance could safeguard you against financial catastrophe. These include the obvious risks like car accidents, as well as the less common risks, such as libel and slander. For example:
Imagine your teenage son does not get along well with one of his teachers at school. He retaliates by making disparaging and untruthful accusations on social media about the teacher. The post is shared multiple times among his peers, eventually reaching thousands of people – including school administration and media – before he removes it. However, the damage has been done. The teacher is placed on leave until her name is cleared, but she faces constant scrutiny from students and parents for months and years to come. She sues your family and wins a judgment for $650,000 for personal injury damages. You discover your homeowners insurance does not cover the damages, but your umbrella insurance does.
Imagine having no umbrella insurance in the above scenario. The outcome could be quite bleak, forcing you to liquidate savings, sell your assets, garnish your wages, and reassess your plans for the future. Of course, there are countless more ways you could find yourself wrapped up in expensive litigation. Large judgments and settlements are not uncommon, and in our increasingly litigious society, they are a very real threat to your financial well-being.
What Umbrella Insurance Covers
Umbrella insurance policies are purchased individually – not as addendums to your existing coverage. Much of the language in the policy contains contingencies that require your primary insurance, such as your auto or homeowners coverage, to pay for damages first before the umbrella policy distributes benefits.
Your umbrella policy will not cover your own personal losses and injuries, nor does it typically cover damages caused by willful, criminal, or intentional acts. However, it can cover third-party damages, injuries, funeral costs, and associated legal fees. We here at Frangquist Insurance Agency are happy to help you discern the language within your policy, including what it does and does not cover.
Umbrella Insurance is Not Just for the Wealthy
If you have $500,000 of auto liability coverage and $300,000 of homeowners liability protection, an additional million dollars in coverage could seem excessive – particularly if you are young or have a modest income. However, umbrella insurance is not just for the wealthy. That is because umbrella coverage not only protects the assets you already have, but also the money you will earn and accumulate in the future. Even if you are just starting out, umbrella insurance could help you protect your future earnings, as well as any inheritance you plan to receive.
We recommend consulting with an independent agent about umbrella insurance if you:
- Have years of earning power in front of you
- Own other properties besides your primary home
- Have accumulated valuable investments or other financial assets
- Have money earmarked in savings accounts for things like retirement and college
- Will receive an inheritance
- Own a dog, trampoline, swimming pool, or other high-risk items
- And more
Selecting Your Coverage
When you purchase umbrella insurance, you may have the option of choosing between $1 and $5 million or more in coverage. The first million dollars of coverage usually costs between $150 and $300 per year, and each additional million is usually added for much less. Here at Frangquist Insurance Agency, we can help you determine how much protection may be right for you based on your income, assets, and budget. We can also help you increase the coverage on your primary liability coverage if the umbrella insurer requires higher limits in order to issue coverage.
As an independent insurance agency, Frangquist Insurance Agency is committed to bringing you competitive rates on the coverage you need. We can help you shop and compare umbrella insurance to find the policy that’s right for you. You may be surprised to learn just how affordable umbrella insurance can really be.
To find out more about umbrella insurance or to request your free personalized quotes, contact our office today. We look forward to serving you soon.