Most people understand the importance of auto and homeowners insurance, but what happens when a serious covered liability claim exceeds the limits of those policies? A personal umbrella policy can provide an additional layer of liability protection above certain underlying insurance policies.
What Is a Personal Umbrella Policy?
Personal umbrella insurance is designed to provide additional liability coverage when an eligible covered claim exceeds the applicable liability limit of an underlying policy, such as auto, homeowners, condo, renters, landlord, or another eligible personal policy.
How Does an Umbrella Policy Work?
Suppose you are legally responsible for a serious auto accident and the covered liability claim exceeds the liability limit on your auto policy. If the loss qualifies under the umbrella policy, the umbrella may provide additional protection after the applicable underlying limit is exhausted, subject to policy terms, exclusions, and limits.
What Can Personal Umbrella Insurance Cover?
Coverage varies, but an umbrella may provide additional protection for covered bodily injury and property damage claims and, depending on the policy, certain personal-injury claims such as libel, slander, defamation, or invasion of privacy. Legal defense provisions may also apply.
Who Should Consider an Umbrella Policy?
Umbrella coverage is not only for high-net-worth households. It may be worth considering if you own a home or rental property, have savings or investments, have youthful drivers, own multiple vehicles, have a pool or other higher-liability exposure, own eligible watercraft or recreational vehicles, frequently entertain guests, or want additional liability protection.
How Much Umbrella Insurance Do You Need?
Personal umbrella policies typically start at $1 million, with higher limits available. Consider your assets, income, home equity, investments, vehicles, drivers, rental properties, recreational exposures, and overall comfort with liability risk when discussing an appropriate limit.
Do You Need Higher Auto and Home Liability Limits First?
Usually, insurance companies require minimum underlying liability limits before issuing an umbrella policy. Requirements vary, so the underlying policies and umbrella should be coordinated to reduce the possibility of unintended coverage gaps.
What Is Not Covered?
Umbrella policies do not cover everything. Depending on the contract, exclusions or limitations may apply to intentional acts, criminal activity, damage to your own property, your own bodily injury, certain business or professional activities, contractual obligations, and certain vehicles, watercraft, rental activities, or other exposures.
What About Rental Properties, Boats, and Recreational Vehicles?
These exposures should be disclosed when applying for umbrella coverage. Eligible rental properties, boats, personal watercraft, motorcycles, ATVs, golf carts, or other recreational exposures may require specific underlying coverage and limits, or may be excluded. Make sure your agent is aware of all relevant properties, vehicles, and watercraft.
Is Personal Umbrella Insurance Worth Considering?
A serious liability claim can happen unexpectedly. Auto and property policies provide important liability protection, but they have limits. An umbrella can add another layer of protection when an eligible claim exceeds the underlying coverage.
Have Questions?
Oberryman Insurance Agency can help you review your auto, home, condo, renters, landlord, and other personal insurance policies to identify liability exposures and determine whether a personal umbrella policy may be appropriate. We can also review the underlying liability limits that may be required. If you live in Northern Virginia or elsewhere in Virginia, Maryland or Washington, D.C., call Oberryman Insurance Agency at 703-986-0468 to discuss your insurance needs, request a policy review or obtain a quote.
Insurance coverage, eligibility, limits, deductibles, exclusions, underlying-policy requirements, and availability vary by insurance company, policy, state, and individual circumstances. This article is provided for general informational purposes only and is not legal or financial advice. Please refer to the applicable policy and contact a licensed insurance professional regarding your specific cov
