This type of coverage is a very affordable way to obtain a good deal of coverage and protection. With a personal umbrella policy in place, your assets and future earnings are much better protected if, for some reason, you face a lawsuit. Umbrella policies are inexpensive because they kick in only after you’ve exhausted your liability coverage under your auto or homeowners policy. The personal umbrella coverage “arches” over your car and homeowners policies to provide an additional layer of protection. A single umbrella policy typically covers family members who are residents of your household. Here are a few examples of risks which could increase your chances of facing a lawsuit and why a personal umbrella might make sense to you:
Do you entertain often at your home? As a homeowner, it is your responsibility to provide a safe environment for your guests. Do you have a step on your back porch that is hard to see? Is the lighting in the back yard adequate? If you often host parties for clients or friends, serving alcohol opens you to liability issues. A personal umbrella policy that offers additional coverage/higher limits is the best way to help mitigate your risk. There are many instances where your homeowners insurance will not cover you at all if an accident occurs because of a party on your premise.
Do you own rental properties? If so, no matter how hard you work to keep your rental property secured and your renters safe, you can’t control when an accident will happen, possibly ending up in court. That can be financially devastating for any rental property owner. An umbrella policy provides excess coverage and added liability protection for the landlord. If your tenant sues you for wrongful eviction or for invading his privacy, an umbrella policy could cover you against such a claim. The more tenants you have, the higher your risk of being sued.
Do you own an ATV, Jet Ski, boat, trampoline or swimming pool? Owning any of these is a lot of fun for your family, but they also increase liability risks. When you have a pool or trampoline at your home, the risk of having an incident is a lot greater, especially if you have children who invite friends over to play. Do you like to spend Sunday afternoons out on the lake? Just like cars and homes, boats and jet skis can cause injury or damage to people or property. Do you and friends like to spend the weekend riding the trails? Recreational vehicles such as an ATV significantly increase the risk of injury and subsequently the risk of a large lawsuit.
Do you frequent social media sites and occasionally post reviews online? Like it or not, if one of those reviews is negative in nature, it is quite possible that you might get sued for defamation, which is not usually included in the liability coverage of a standard home policy. In this scenario, an umbrella policy could be critical in helping you cover litigation costs and/or any damages awarded against you.
Do you own man’s best friend?
Unfortunately, your furry friend can put your assets at risk. Many people are bitten by dogs each year, often occurring on the owner’s property. Dog bites, according to the Insurance Information Institute, account for about one third of all homeowner insurance claims, which only cover limited damages. Lawsuits such as these can easily exceed the limits on a homeowners policy, leaving the insured responsible for the remainder. An umbrella policy would prevent that.
Do you own vacant land? You probably already know that your homeowners insurance doesn’t cover land. If an invited or uninvited guest trips on that broken front step of your home and breaks a leg, you can be sued. As the property owner you are responsible for anything that happens there. Your homeowners insurance policy’s liability coverage will pick up the lawsuit tab UNLESS it is determined it happened because of poor maintenance, failure to make repairs, or negligence. The same applies to that vacant land you own. You are responsible for anything that happens on your land. Do you own vacant land that the public could somehow access? Someone who gets hurt on your property, even if uninvited, could sue you for damages. It’s even riskier if you lease it out for hunting.
Very simply stated, most types of insurance provide one particular kind of coverage. Auto insurance protects you in case of a car accident just as your homeowners policy covers your house and the personal belongings in it against damage or theft. By contrast, umbrella insurance is a single policy that covers most aspects of your financial life like an umbrella completely covers you from the rain. So when you’ve exhausted the liability limits on one of your other insurance policies, the umbrella policy steps up to help cover the additional costs. Talk to your agent about the importance of getting a personal umbrella in place for you!