As we celebrate National Umbrella Month this March, there’s a different kind of umbrella that insurance professionals are interested in…
Property and casualty agents are often asked what an umbrella insurance policy is. Why would one purchase an umbrella policy? Isn’t there enough coverage in a typical policy? It may or may not be enough—depending on your coverage needs.
So what is an umbrella policy? An umbrella insurance policy is an additional insurance policy that exceeds the amount insured by your property and casualty insurance policy or other existing insurance policies. An umbrella insurance policy can also be the primary insurance policy that protects losses not covered by another insurance policy. A policy owner would want to be aware of gaps in their primary insurance policy and evaluate the risk of these gaps.
Why would you purchase an umbrella policy? Simply put, umbrella policies provide coverage beyond your usual needs. A personal umbrella policy, for instance, may offer coverage for injuries related to false arrest/detention/imprisonment or malicious prosecution; libel, slander, or defamation; invasion of privacy, and wrongful eviction or entry.
Consider umbrella policies as an added protection if someone files a lawsuit against you for supposed damages due to your decisions as a volunteer member of a nonprofit board, your blog entries about controversial issues, or even your rants on Facebook.
More practically, umbrella policies can provide additional protection against things such as:
- An uninsured motorist whom you are involved in an accident with
- Personal injury of a child jumping on a trampoline
- Injury of a guest swimming in your pool
- Someone falls down the stairs in your property
As you can see, an umbrella policy serves as another layer of insurance on top of your auto and home insurance liability coverage. With the average cost for a $1 million policy at approximately $200 annually, it is relatively a low price to pay—considering the peace of mind and security an umbrella policy offers. Having to tap into your retirement funds or sell your home in an effort to pay off a settlement could be very devastating for your family and your livelihood.