Have you ever heard of a Personal Umbrella Policy? No? Not many people have, but if you have a roof over your head, an automobile, a watercraft, a pool, even children and a dog, you should consider asking your Agent why they have not suggested a Personal Umbrella Policy for you.
First, let’s start with what an Umbrella Policy is:
Think of this Policy as an actual umbrella; a supplemental policy that goes OVER your other policies; your Homeowners Insurance Policy, your Auto Policy, your Boat Insurance Policy, etc. It’s a safety net, should you ever have a claim that exceeds the liability limits of one of those policies.
For example, you cause a car accident and the total damages are $1,000,000, but your auto policy only covers up to $300,000. Without an Umbrella Policy, you would be liable for the remaining balance of the claim, whether it is through garnished wages, your savings, retirement savings, etc. But, if you had an Umbrella Policy, once your Auto Policy pays its limit, your Umbrella Policy pays out the remaining $700,000 (assuming it is within your umbrella liability limits.) An Umbrella Policy is a supplemental safety net.
There are plenty of misconceptions about Umbrella Policies, the first, being that it automatically kicks in as soon as you file a home or auto claim, and the second, that if you have a policy, it means that it’s easier for someone to sue you. Both are entirely FALSE!
An Umbrella Policy ONLY takes effect after your underlying liability policy (like auto or homeowners) has fully paid out its coverage limits, and the damages or legal costs exceed those limits. So just filing a claim on your underlying policy isn’t enough. The umbrella policy only comes into play if you are legally liable for more than what your base insurance covers and the policy paid out its’ full limit.
As to the second misconception that just having an umbrella policy means that you are an easier target to sue; our Landmark Personal Lines Agents have yet to file an Umbrella Policy claim, and our Senior Agent is coming up on her nineteenth year with Landmark Insurance. Umbrella policies are there in the event you cause an accident where you are at fault, or someone gets hurt on your property and the injured party does bring a lawsuit against you. An Umbrella Policy is there to provide protection for you.
Here is an example:
A guest slips on your icy front steps, breaks their leg, and needs surgery. They sue you for $900,000 in medical bills, lost wages, and pain & suffering. Your Homeowner’s Liability limit is $300,000.
How Umbrella Policy Insurance Works:
- Homeowners Insurance pays first: It covers the first $300,000.
- Umbrella Policy covers the rest: It kicks in to cover the remaining $600,000(assuming you have at least $1M in umbrella coverage). No gap, no need to sell your assets or drain your savings.
- Legal defense is included: Your Umbrella Policy typically covers your legal costs, separate from the coverage limit. That means even if you’re not found liable, it still pays to defend you in court.
This protection also applies if your dog bites someone, a contractor gets hurt on your property, or even if you’re sued for defamation or slander. It’s not just for “rich people”—it’s for anyone with assets to protect, such as a house, a retirement account, savings, or even future wages.
Now that you know what an Umbrella Policy is, ask yourself for the little bit of money that you are saving without one, is it worth the risk of not having the security of an Umbrella Policy? Do you know what your auto liability limits are? Or what the cost of a new car is today? Could you even get a loan if you needed one, or would your wages be garnished? Your retirement accounts be drained? Don’t fall prey to ignorance, ask your Agent today about a Personal Umbrella Policy to Supplement ALL of Your Personal Insurance Policies.
Quick Reality Check: You Might Need One If You…
- Own a home or rental property
- Drive regularly (especially in high-traffic areas)
- Have savings, investments, or retirement accounts
- Host guests at your home
- Have a dog, trampoline, pool, or teen driver
- Volunteer, coach, or serve on a board
An Umbrella Policy Protects:
- Legal defense costs, Attorney fees, and Court expenses
- Your assets (like your house, retirement accounts, or savings
- Umbrella Policies cover things your standard insurance usually doesn’t, like:
- Libel or slander lawsuits
- False arrest or detention
- Liability from volunteer work or serving on a nonprofit board
- Some international incidents
- An Umbrella Policy with personal injury protection can act like digital body armor for your family in the event of cyber-bullying.
And don’t forget, Umbrella Policies are for businesses, too!
