Umbrella Insurance: How a little extra can go a long way in protecting your future
Umbrella insurance is a type of liability insurance that provides coverage above and beyond the limits of your primary insurance policies, such as your auto or homeowners insurance. It's called "umbrella" insurance because it provides an extra layer of protection that sits on top of your other policies.
One of the main benefits of umbrella insurance is that it provides additional liability coverage in the event that you're sued for damages that exceed the limits of your other policies. For example, if you're in a car accident and you're found at fault, your auto insurance will pay up to the policy limit to pay for the damages. But if the damages exceed your coverage limit, you could be on the hook for the difference, causing you to liquidate assets or even garnishing your future wages. That's where umbrella insurance comes in - it can provide additional liability coverage to protect you from these types of situations and potential financial hardship.
Umbrella insurance also offers the ability to provide an extra $1-10 million in liability coverage for claims like libel, slander, defamation of character and invasion of privacy which have increased in the age of social media. Additionally, it helps cover defense costs, attorney fees and other charges associated with lawsuits, even extending to international occurrences.
It's worth noting that umbrella insurance is not the same thing as an excess liability policy. While both types of policies provide additional liability coverage, they do so in different ways. An excess liability policy simply increases the limits of your existing policies, whereas an umbrella policy provides additional coverage for a broader range of risks.
When it comes to umbrella insurance, it’s important to remember that it typically only covers liability claims, not damage to your own property. For example, if you're in a car accident and your car is damaged, your umbrella insurance won't help you pay for repairs or replacement of your own vehicle but will for any other vehicles or property involved. Additionally, umbrella insurance usually doesn't cover intentional or criminal acts, such as assault or fraud.
How might an umbrella insurance policy come in handy in everyday situations? Here are a few examples:
- If you're hosting a party and one of your guests gets injured on your property, your homeowners insurance may cover their medical bills up to a certain limit. If their bills exceed that limit, your umbrella insurance could help provide coverage for those medical bills and any other expenses.
- If you're driving and accidentally cause an accident that injures another driver, your auto insurance may cover the other driver's medical bills and property damage up to a certain limit. If those damages exceed your policy limits, your umbrella insurance could provide additional coverage to protect you in the event of a lawsuit.
- If you're a landlord and one of your tenants sues you for an injury they sustained on your property, your landlord insurance may cover your legal fees and damages up to a certain limit, but if the damages exceed that limit, your umbrella insurance could provide additional coverage to protect your assets.
Overall, umbrella insurance can be a valuable tool for protecting your assets and providing peace of mind in the event of an unexpected liability claim. It's important to understand what it does and doesn't cover. Your First Tech Insurance Agent is here to work with you to determine whether it's the right choice for you.