Many people have different reasons for getting insurance, but primarily they get it to protect the things and people that matter most. But what happens when a devastating accident has the potential to leave you in financial ruin? You need a way to protect yourself from this possibility. Enter a personal umbrella insurance policy. This type of insurance has becomes increasingly important as the cost of things like lawsuit settlements, legal defense, and accident related medical treatment have gone through the roof.
What is a Personal Umbrella Policy?
In simple terms, a personal umbrella policy is extra insurance coverage that helps protect you from major claims and lawsuits. Personal umbrella insurance helps protect your assets in several ways:
- It starts when the coverage limits on your homeowners and auto insurance are exhausted. It extends the limits on those policies.
- It provides coverage for claims that may be excluded by other liability policies including false arrest, invasion of privacy, malicious prosecution, mental anguish, libel, slander, and liability coverage on rental units you own.
- It often also covers legal expenses in addition to their policy cash limits. This means that your insurer can appoint a legal team you might otherwise not be able to afford to defend your interests.
What does Personal Umbrella Insurance cover?
Personal umbrella insurance provides coverage for:
- Bodily injury
- Property damage
- Certain lawsuits
- Personal liability situations
Bodily injury liability covers the cost of damages to another person's body. Examples include cost of medical bills and/or liability claims due to injuries caused by:
- A serious auto accident where you are at fault
- Harm caused to others by your dog
- A guest falls in your home and is injured
- A neighbor's child falls while playing in your yard
Property damage liability covers the cost of damage or loss to another person's tangible property. Examples include the cost associated with damage to vehicles and other property due to an auto accident where you are at fault.
Owners of rental units help protect against liability that you may face as a landlord. An example is someone tripping over a crack in the sidewalk on your rental property and suing you for damages.
Coverage is also provided if you are sued for personal liability situations including:
- Slander: a false spoken statement
- Libel: a false written statement
- False arrest, detention, or imprisonment
- Malicious prosecution
- Shock/mental anguish
How is Personal Umbrella used?
Let's look at a few examples how a personal umbrella policy would protect you.
Example 1: Suppose you have a liability limit of $300,000 on your auto insurance policy. Umbrella insurance might add another $1 million to that total. Suppose you are facing a liability and claim of $800,000. Your auto policy would pay the first $300,000, then your umbrella policy kicks in to pay the balance
Example 2: You are hosting a party at your house, when a neighbor's child accidentally trips and falls in your yard. The fall results in an ambulance ride, broken bones, and medical costs that rack up to $100,000. While your homeowners insurance may cover the fall, it may only cover up to $60,000 in damages. You would be forced to pay the rest of the $40,000 worth of costs out of your own pocket.
How Important is Personal Umbrella Insurance?
Without a personal umbrella policy, when the limits of your home or auto insurance are reached in a claim, that's it! The balance of costs, which could run into hundreds of thousands of dollars, must be met from your own pocket.
Not everyone will qualify though for a personal umbrella insurance. Depending on the insurer, your auto and homeowners policy need to carry certain limits before you will be considered for a personal umbrella policy. If you qualify, you will find the rates for a personal umbrella policy are remarkably inexpensive.
Don't let an unforseen accident leave you in financial ruin. Talk to us today and discuss the idea of a personal umbrella policy to give you peace of mind.
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