What Is a Personal Umbrella Policy?
The chances of you exceeding your liability limits may be slim, but they’re never zero. A personal umbrella policy from Southpoint can provide an extra safeguard if disaster strikes.
You can do all the right things and still end up without coverage after an unforeseen event. One particularly bad accident could snowball into a multi-million-dollar liability lawsuit that quickly exceeds your home or auto limits. However, you don’t have to drain your bank account once coverage stops—you can purchase a personal umbrella policy that picks up the bill when your other coverage ends.
What Does a Personal Umbrella Policy Cover?
Umbrella policies do precisely what their name implies—they shield you from the financial aftermath of a liability lawsuit when your other policy limits aren’t enough. During most claim scenarios, your umbrella policy doesn’t come into play. If your home and auto policy limits are high enough to cover your lawsuit costs, you won’t need any extra coverage. However, if a property damage or personal injury lawsuit exhausts your other coverage limits, your umbrella coverage will kick in up to a specified amount.
Umbrella policies add extra liability protection to your home, condo, renters, boat, or auto policies, and they typically come in $1 million increments. Because personal umbrella policies sit over multiple primary policies, they’re an excellent way to add extra coverage across the board for a low price. For example, let’s say you have a $500,000 liability limit on your auto policy and a $300,000 limit on your homeowner’s policy. A $1 million umbrella policy would add extra coverage to both, making your limits $1.5 million and $1.3 million, respectively.
Home Umbrella Policy Coverages
Your umbrella insurance coverage adds additional limits to your homeowner’s policy, but only in specific scenarios. Umbrella coverage won’t pay for personal property damage, so if you choose to repair your damaged home with materials that exceed your property limit, your umbrella policy won’t cover the difference. It does, however, add to your personal liability coverage.
There are many scenarios in which you might exceed your homeowner’s insurance liability limits. A guest could slip on a toy your child left on the floor, fall down the stairs in your home, and sustain a severe head injury. That guest might sue you in court for their medical costs and months of lost wages for a total of $750,000, exceeding your $300,000 limit. Your umbrella policy would pay the additional $450,000. A similar lawsuit could occur if you caused substantial property damage to a neighbor’s home.
Auto Umbrella Policy Coverages
Car accidents can get extraordinarily expensive, especially if you or a family member is at fault for an accident involving multiple vehicles. As a result, umbrella policies are a wise choice for anyone who operates a motor vehicle regularly, but especially those with teenage children and other high-risk drivers insured under their policy.
Whereas liability lawsuits under your home insurance policy typically involve either property damage or bodily injury, most auto lawsuits involve both. For example, if you caused an accident in which three people ended up severely injured, and their car was totaled, the driver could sue you for their medical bills, lost wages, and the cost of their vehicle. Your $500,000 auto limit would likely only cover a portion of your court costs and settlement fees, but your umbrella policy would cover the rest.
Save Yourself From a Future Financial Disaster
Spending a few hundred dollars on an umbrella policy today could save you from losing your home, car, and retirement savings in the future. You never know when a life-altering accident might happen, but you can keep the damage to a minimum by purchasing a personal umbrella policy from Southpoint.
Advantages of an Umbrella Insurance Policy
Many people overlook umbrella policies because they assume umbrella liability is an unnecessary coverage. Additionally, they don’t want to spend extra on a policy they may never use. While it’s true that people rarely dip into their umbrella coverage, that doesn’t mean it’s not worth your money. Purchasing an umbrella policy is often cheaper than increasing the limits on your other personal insurance policies.
According to the Insurance Information Institute, a $1 million umbrella policy typically costs $150 to $300 a year. Those few hundred dollars could prevent you from paying 1,000 times that amount after an accident down the road. If you can imagine a scenario in which you get dragged into a lengthy, high-stakes lawsuit, an umbrella policy is well worth the money.
At Southpoint, we partner with the most recognizable insurance companies to provide our clients with the best and most affordable umbrella coverage. We know which carriers offer the most comprehensive policies, and we use our long-lasting relationships to negotiate the lowest rates. By partnering with our team, you can enjoy the advantages of an umbrella policy without dealing with the logistics of finding coverage.
Do You Need a Personal Umbrella Policy?
Anyone can benefit from an umbrella policy, but certain people need the extra coverage more than others. If you fall under any of the following categories, you should strongly consider purchasing an umbrella policy:
- You own a dog: If your dog bites someone and that person sues you for medical costs, you are liable.
- You drive frequently: Driving long distances or commuting to work during rush hour can increase your chances of being in a car accident, thus increasing your probability of being sued.
- You own a home with a pool: You may have purchased your home because it had a pool, but that extra feature brings additional risk. If a guest gets injured while using your pool, you could get hit with hefty damages.
- You rent out property: Your renters may be responsible for accidents occurring in their space, but you’re liable for incidents occurring in communal areas. Additionally, a renter could sue you for negligence. Renting property comes with inherent risks, but an umbrella policy can offset the risks and add to your landlord insurance.
- You entertain guests frequently: Guests can sustain injuries at your home and sue you for damages. The more guests you invite into your home, the more risk you carry.
If you’re unsure whether an umbrella policy is the right choice for you, our insurance experts can help you assess your risk factors and provide affordable quotes from multiple carriers. We have seen our fair share of large claims, and we know which clients can benefit most from extra coverage. Contact us today to learn more about our personal umbrella insurance and the peace of mind it provides.