Umbrella Insurance: Does It Cover Your Life?

Umbrella insurance is a type of personal liability insurance that covers claims beyond the limits of your regular insurance policy. It is not a standalone policy and must supplement other liability policies like auto, homeowners, or renters insurance. Umbrella insurance is relatively inexpensive and can provide coverage for injuries, property damage, certain lawsuits, and personal liability situations. It does not, however, cover damage to the policyholder's own property or liability due to injury or damage caused intentionally. While it does not cover life insurance, it can be a valuable addition to your insurance portfolio to protect your assets in case of a lawsuit.

Umbrella insurance covers bodily injury liability

Umbrella insurance provides extra liability coverage beyond the limits of your other insurance policies, such as car or homeowners insurance. It covers bodily injury liability, which includes the cost of medical bills and/or liability claims due to injuries caused by accidents where you are at fault. For example, if you cause a car accident and the cost of the injuries you cause to others exceeds the limit of your auto insurance, umbrella insurance will cover the remaining amount, up to the limit you choose for your umbrella policy.

Umbrella insurance can also provide coverage for personal liability situations, such as harm caused to others by your dog, a guest in your home falling and injuring themselves, or a neighbour's child falling and getting hurt while playing in your yard. It covers the cost of medical bills and liability claims resulting from these types of incidents.

In addition to bodily injury liability, umbrella insurance also covers property damage liability, which includes the cost of damage or loss to another person's tangible property due to an accident where you are at fault. For example, if you cause a car accident and the damage to the other vehicle exceeds the limit of your auto insurance, your umbrella policy will cover the remaining cost of repairs.

Umbrella insurance provides peace of mind and financial protection by covering costs that your primary insurance policies may not fully cover. It helps protect your assets and future by providing additional coverage when your other insurance policies' limits are exhausted.

It covers property damage liability

Umbrella insurance is a type of personal liability insurance that covers claims in excess of regular homeowners, auto, or watercraft policy coverage. It covers property damage liability, meaning that it will pay for the cost of damage or loss to another person's tangible property. This includes the cost of damage to vehicles and other property due to a car accident where you are at fault. It also covers the cost of liability claims due to incidents on rental properties that you own, such as a tenant's dog biting someone or someone tripping over a crack in the sidewalk and suing you for damages.

Umbrella insurance covers not just the policyholder but also other members of their family or household. It is relatively affordable, with most $1 million policies costing $150 to $383 per year. The cost depends on factors such as the amount of coverage, the state you live in, and the number of homes, cars, and household members the policy covers.

Umbrella insurance is typically purchased from the same company that provides your auto and/or homeowners insurance, and you may need to have a minimum level of home and auto liability insurance to qualify. It is a good option for those who want extra peace of mind and protection for their assets in case of a lawsuit.

It covers other personal liability situations

Umbrella insurance covers other personal liability situations, such as false imprisonment, wrongful entry, and invasion of privacy. It also covers libel and slander, which are written and spoken statements that cause injury, respectively. Umbrella insurance can also cover legal fees and damages if someone accuses you of libel or slander.

Umbrella insurance covers not just the policyholder but also other members of their family or household. It is quite cheap compared to other types of insurance, especially considering the amount of coverage it provides.

Umbrella insurance can be a good idea for people who want greater peace of mind about the possibility of a financial liability that could deplete their assets. It is also a good option for those with a high risk of being sued, such as people who own property, rent it out, employ household staff, have a trampoline or hot tub, host large parties, or are well-known public figures.

The cost of umbrella insurance depends on the amount of coverage, the state of residence, and the risk presented to the insurance company. Most $1 million policies cost between $150 and $300 per year, with the price increasing by about $75 per year for every additional $1 million in coverage.

It provides coverage for claims that may be excluded by other liability policies

Umbrella insurance is extra liability insurance that provides coverage for claims that may be excluded by other liability policies. It covers incidents that your main insurance might not, such as libel and slander. It also covers false arrest, detention or imprisonment, malicious prosecution, wrongful eviction or entry, and more.

Umbrella insurance is a good idea for those with significant assets or anyone seeking extra peace of mind. It is also useful for those who engage in activities that could increase their chances of facing a lawsuit, such as owning dogs or a swimming pool.

Umbrella insurance is an excellent addition to your insurance portfolio if you need liability coverage beyond what your base car insurance or home insurance policies provide. It can protect your net worth if you are sued for causing injuries or damage to someone else's property.

Umbrella insurance is also a good way to buy extra coverage to protect your assets. For example, if you cause an expensive car accident that injures others, your assets such as your bank account, real estate, vehicles, and anything of value could be seized if you lose a lawsuit.

It covers legal costs

Umbrella insurance covers legal costs in addition to paying damages up to your liability limit. Say you have an umbrella policy with $1 million in liability coverage, and someone sues you for that full amount. If a court finds you liable, your insurer could pay the $1 million plus provide your legal defence.

You might have to pay a "retained limit", which is similar to a deductible. It's an amount you'll have to cover before your policy begins to pay.

Details and exclusions can vary significantly between umbrella policies, but here are a few sample scenarios that would often be covered:

• Your teenage son gets into a car accident, and the cost of injuries to other drivers is above your auto insurance liability limit.
• A houseguest falls down your stairs and sues you for her medical bills plus pain and suffering, exceeding your homeowners insurance liability limit.
• A restaurant sues you for writing a negative review online.

Frequently asked questions