How Does an Umbrella Insurance Policy Work?

August 28, 2023

Umbrella InsuranceAdditional coverage that goes above and beyond the limitations and scope of other insurance. Its purpose is to shield policyholders against significant legal actions and liabilities.

In other words, Umbrella Insurance is one of those things that are built to give you "extra" protection for those just-in-case moments. It protects your assets over and beyond your normal limits on current policies. That means you have extra insurance coverage for your homeowners policy, auto insurance policy, and any other insurance policies you may have that include liability coverage. 

What Exactly Does Umbrella Insurance Cover?

As a homeowner, you may have someone visiting your home. If they slip and fall, you could be held liable for their injuries and any other damages sustained. An umbrella policy provides extra assurance that their bills will be taken care of without you suffering a huge hit. It helps avoid certain lawsuits and keeps your finances in order.

Even though your current homeowners policy should cover injuries and damages, there are instances in which certain injuries are so extensive that they may not be covered or at least not fully covered. This is an added benefit that will keep your investment safe. You may be wondering what could possibly be covered by this type of policy. Here are a few examples:

Property Damage

With an umbrella policy, any damage or loss to someone else’s property will be covered. That could mean anything from your kid accidntly burning down their friend's house to damage to a multi-vehicle accident in which you are the party at fault.

Bodily Injury

For example, if you have a dog and it bites someone, your umbrella policy will cover anything beyond your homeowners liability limit. Additionally, if you have guests over and they slip and fall on your property, those injuries will be covered under this type of policy.

Personal Liabilities

Umbrella liability insurance also comes in handy under other personal liabilities. If you are ever sued for slander or libel or someone accuses you of malicious prosecution, this policy will cover your expenses.

Who Needs Umbrella Insurance?

Adding this additional coverage is important to consider if you are someone who has a lot of assets, multiple policies that contain liability coverage, a business to run, or other situations that could put you in a position that compromises your investments. If you use your automobile regularly, you are already exposing yourself to an increased amount of risk. Having an umbrella insurance policy to supplement your auto insurance policy could be just the thing you need. Or, if you transport a number of people from place to place, this would come in handy if you were ever to get into an accident and someone were to be hurt. If you are a parent who transports kids from place to place—especially if they are not your own—this is a policy that should definitely be considered.

Understanding how an umbrella insurance policy can meet your needs will benefit you in the long run. It’s always better to be safe than sorry.

Please contact us with any questions and a quote.  We're happy to assist you in any way we can.

*If the policy coverage descriptions in this article conflict with the language in the policy, the language in the policy applies.