What is an Umbrella?

Umbrellas Can Protect You From More Than Just The Rain

During these past few weeks, our agency has had an influx of questions about a personal umbrella policy.  What is an umbrella?  Isn’t it just something to use on a rainy day?  Do I really need one if I only have a house and car?  I don’t own a business, have any rental properties, and I feel like my auto liability limits are sufficient.  Well, we are here to tell you an umbrella policy is the best “sleep at night” coverage you can buy.  Read on to learn more about a personal umbrella policy and what it covers.  Hopefully at the end of this blog, you will pick up the phone to call your insurance agent and get an umbrella quote right away!

So, what is a personal umbrella policy?  

In boring insurance talk, it is excess liability coverage that sits over your liability policies for your home(s) (primary, secondary, or seasonal), auto, recreational vehicles (motorcycle, off-road vehicles, boats, etc.), and any rental homes you may have.  It gives you an additional layer of liability protection without having to predict where that big claim is going to happen.  Umbrella policies offer limits starting at $1 million up to at least $10 million of excess liability coverage.  Wow!  That sounds amazing, but doesn’t that cost a lot of money?  It actually does not.  Umbrella policies with a $1 million limit start around $150-$250 per year, depending on what exposures (home, auto, boat, young drivers, etc.) they are covering. 

What are some real life situations an umbrella policy might cover? 

It can provide coverage for something you can be held personally liable for, such as a dog bite or attack, a swimming accident at your home pool, someone getting hurt on your trampoline, an at-fault auto accident, libel, slander, defamation of character, invasion of privacy, defense costs, attorney fees, and other items that can be associated with a lawsuit, just to name a few! 

It can also help provide protection if you serve on a nonprofit board.  What was that you said?  Oh, your board has Directors & Officers (D&O) coverage?  That is awesome!  But what if the person who is suing the board specifically names you and your spouse in the lawsuit?  Or what if the demand is larger than the Board’s coverage limit? 

How about if you have a teenage driver?  As much as we would like to think our teenage driver will not get distracted while driving, will keep their hands at 9 and 3, and keep a safe distance from other cars, that is not always the case.  No matter how many hours they have practiced driving, experience on the road is key and accidents will happen. 

What’s the bottom line?

Umbrella policies have a low premium, relative to how much coverage they provide.  Trust us, we have seen a couple of our insureds have to use this coverage right here in Lexington County, SC.  Fortunately for them they purchased this “sleep at night” coverage and did not have to incur the claim costs when the underlying policy limits were exhausted.  As we talked about in our last blog post, society is becoming more and more litigious.  So do you have an extra $150-$250 laying around or an extra $1 million?

About Joe Popkowski