Imagine these three scenarios: Your pre-teen’s friend, despite your house rules against it, dives into the pool when you go in the house for sodas and breaks their collarbone and nose. Your child is away at college, and while driving in the rain, they hydroplane into another car, injuring a massage therapist who sues for lost wages while they are out of work. You are walking your dog, and it bites your neighbor when they try to pet it.
You may be thinking, “This is why I have home and auto insurance.” But what if in these scenarios, the medical and legal costs exceed the limits of what your policy covers, leaving you financially responsible for the rest? That’s where umbrella insurance comes in. Umbrella insurance adds extra protection when your primary insurance cannot provide enough coverage. Also, umbrella insurance may cover costs without having an underlying policy. This is what differentiates umbrella insurance from an excess liability policy — an excess liability policy provides additional protection to one type of insurance you already have. So, if you rent a vacation home or watercraft and cause accidental damage to another’s property or injury to another person, your umbrella insurance could help, even though you do not own insurance policies for vacation rentals or boats. Umbrella insurance could also be added to multiple underlying policies.
Umbrella insurance may also cover legal defense fees in slander, libel and defamation lawsuits brought against you. With social media being a large part of our daily interactions, a lawsuit could occur if a household member or dependent posts comments that hurt someone’s reputation or a review that affects a business negatively.
What Umbrella Insurance Can Cover
Talk to your agent about the umbrella insurance they offer for a specific and full list of what is covered, but here are some common incidents that umbrella insurance could cover:
Others' injury treatment after an auto accident or accident on your property that exceeds the limits of your auto and homeowners liability coverage
Others' unintentional property damage
Tenant’s injury treatment or property damage if you're the landlord
Defense of lawsuits for slander, libel and defamation of character
Legal defense costs for certain types of claims
Claims from using rental specialty vehicles
Claims occurring while traveling internationally
What Umbrella Insurance Does Not Cover
Here are examples of what will not be covered under umbrella insurance. To learn more about what is excluded from an umbrella policy, speak with your agent.
Your injury treatment (This should be covered by other insurance policies like your health and auto, or by another person’s insurance policy if they accidentally injured you.)
Intentional or criminal and illegal acts
Others’ injuries treatment or property damage under your business’s responsibility
Umbrella insurance can be very helpful, especially if you have a pool, a new driver in your home, pets, rental property, etc. To figure out what amount of umbrella coverage you need, consider your assets and future earnings and discuss options with your insurance agent.