How Does an Umbrella Policy Work?
Here are some examples of incidents an umbrella policy could cover if your homeowner's insurance or auto insurance wasn’t enough:
- Your dog runs out of the house and bites a neighbor going for a walk. Your neighbor sues you to cover her medical bills, lost wages, and pain and suffering.
- Your son gets into a fight at school and punches a boy and breaks his nose. The boy’s parents sue you.
- You cause a multi-car accident and your auto insurance property damage coverage isn’t high enough to replace all the vehicles.
- You send snacks to your son’s school for a field trip. Several students get food poisoning and their parents sue you.
As you might have gathered from these examples, umbrella insurance covers not just the policyholder, but also other members of their family or household. Make sure you understand how your policy defines a household member so you will have the coverage you need.
Do You Need Umbrella Insurance?
The question you should ask yourself is, am I at risk of being sued? Everyone is, so umbrella insurance makes sense for everyone. It’s a small price to pay for the extra peace of mind.
But some people are more likely to need an umbrella policy than others. If you engage in some activity that puts you at greater risk of incurring excess liability, you’re an even better candidate for an umbrella policy. Personal liability risk factors include owning property, renting it out, employing household staff, having a trampoline or hot tub, hosting large parties, and being a well-known public figure.
Purchasing Umbrella Insurance
If increasing your coverage and purchasing an umbrella policy is too expensive for you, it may be possible to purchase endorsements to your auto or homeowners insurance that increase your liability limits beyond the usual max limits. You probably won’t get as much coverage as an umbrella could provide, but you’ll still get better protection than you had before.
Another possible requirement for getting umbrella insurance is that you have your auto or homeowner's insurance with the same company that issues your umbrella policy. But even if the umbrella insurer you choose does not require you to have your home and auto insurance policies with them, it might be cheaper if you did to get a multi policy discount. Also, it might be easier to have all your policies with the same company for managerial reasons.
The Bottom Line
Even the most careful person with the best intentions can end up on the hook for a huge judgment from a personal liability lawsuit. While you’re unlikely to find yourself in this situation, it’s still smart to protect yourself against such a devastating financial loss. Umbrella insurance can help you do that.
If you have questions or would like to get a quote on umbrella insurance give us a call at Hennessey, Thames and Leavitt Insurance Agency are ready to help. You can reach us by phone at 601-636-5560, by email at email@example.com or come by the office and see us at 1001 Belmont Street. Check us out on Facebook or our website www.leavitt.com/vicksburg.