Umbrella insurance is a type of personal liability insurance that provides additional coverage beyond the limits of your homeowners or auto insurance. It can help protect you financially in the event that you are sued for damages or injuries that you are found liable. For example, if you are found liable for a car accident that causes serious injuries and the damages exceed the limits of your auto insurance, your umbrella insurance can help cover the additional costs. It can also provide coverage for other things such as defamation of character, false arrest, and invasion of privacy. In simple terms, umbrella insurance is extra coverage that acts as a safety net in case of a major liability claim.
There are several scenarios where umbrella insurance may be important to have:
- If you have assets, such as a home, investments, or savings, that you want to protect. Umbrella insurance can help protect your assets in the event that you are found liable for a large claim.
- If you are at a higher risk for liability claims, such as if you own a swimming pool, trampoline, or have a dog.
- If you frequently host parties or events at your home, where there is a higher risk of accidents or injuries occurring.
- If you have a high net worth, umbrella insurance can provide additional liability coverage over and above the limits of your homeowners or auto insurance.
- If you engage in activities with potential high-risk activities like boating, flying, hunting, recreational driving, snowmobiling, or off-road driving.
It is worth noting that umbrella insurance policies typically have a lower coverage limit than the underlying policy, and an umbrella insurance policy typically provides liability coverage that is in excess of the underlying policy.
When does it not cover me?
Umbrella insurance is an additional layer of liability coverage that can help protect you in the event of a large claim or lawsuit, but it does not cover everything. There are certain situations where umbrella insurance may not provide coverage:
- Intentional acts: Umbrella insurance typically does not cover damages or injuries that result from intentional acts, such as assault or battery.
- Professional services: Umbrella insurance typically does not cover claims arising from professional services, such as those made by clients against doctors, lawyers, or accountants.
- Business-related claims: Umbrella insurance typically does not cover claims arising from a business or commercial activity.
- Auto accidents in certain jurisdictions: Some jurisdictions may have different laws that prohibit umbrella insurance from covering auto accidents.
- Worker’s compensation claims: Umbrella insurance policies do not cover claims arising from worker’s compensation laws.
- Claims arising from criminal activities: Umbrella insurance policies typically do not cover claims arising from criminal activities.
It is important to note that umbrella insurance policies will have exclusions and different coverage limits, so it is important to read the policy carefully and understand what is and is not covered.
Is there personal and commercial umbrella insurance?
Yes, there are both personal and commercial umbrella insurance policies available.
Personal umbrella insurance is designed to provide additional liability coverage for individuals and families. It typically covers events such as car accidents, slip-and-fall accidents, and other incidents that occur on personal property. Personal umbrella insurance policies typically have lower coverage limits and are meant to be used in conjunction with a personal auto or homeowners insurance policy.
Commercial umbrella insurance, also known as excess liability insurance, is designed for businesses and organizations. It provides additional liability coverage beyond the limits of a commercial general liability (CGL) policy. It covers events such as third-party injuries, property damage, and other incidents that occur on commercial property. Commercial umbrella insurance policies typically have higher coverage limits and are meant to be used in conjunction with a commercial general liability policy.
It’s worth noting that commercial umbrella insurance may have different requirements for the underlying policy, such as a specific type of liability insurance or a certain coverage limit, this is something that should be checked with your insurance agent.
