Umbrella insurance—sometimes referred to as a personal umbrella policy or “PUP”—is extra insurance you can purchase that provides additional protection beyond limits and coverage of your existing policies, such as auto or homeowners insurance. Generally, a PUP is meant to help protect you from large and potentially devastating lability claims or judgements.
WHAT DOES AN UMBRELLA POLICY COVER?
An umbrella insurance policy provides coverage beyond the limits of other insurance policies or for claims that may not be covered by liability policies such as:
- Damage to property.
- Certain lawsuits (like libel, slander, false arrest, and others). Personal liability situations.
- Landlord liability.
The policy would kick in when your current insurance policy limits are exhausted, or if you have a claim that is not covered (excluded) by other policies.
You typically need to have both an auto and property insurance policy before you can purchase an umbrella policy.
WHAT IS NOT COVERED BY AN UMBRELLA POLICY?
There are a few things not covered by an umbrella policy, including coverage for:
- Your own injuries or damage to your personal property.
- A criminal or intentional action that causes damage to someone else.
- Liability you assume under a written or oral contract.
- Business losses.
HOW DOES AN UMBRELLA POLICY WORK?
Bodily injury coverage helps pay for costs you’re responsible for in an auto accident or accident on your property, including (but not limited to):
- Medical expenses.
- Loss of income.
- Funeral expenses.
Personal injury protection may cover expenses if you’re held liable for damages stemming from things like:
- Invasion of privacy.
- Defamation of character.
- Wrongful entry.
- And more.
Property damage coverage can help cover damage you cause in an auto accident or to someone else’s property (if the repairs exceed the limits of your typical auto or homeowners insurance policy).
Landlord liability can offer extra protection for your properties that go beyond the limits of a landlord policy (if you own rental property).
For example, let’s say you are in a car accident and you are at fault. The cost of the injuries you cause to others is $500,000, but the bodily injury limits on your auto insurance are $300,000. Your auto policy would cover $300,000 worth of injuries, but without umbrella insurance, you’d be responsible for the remaining $200,000 out of your pocket. With an umbrella insurance policy, the remaining cost would be covered (up to your PUP’s limit).
DO I NEED UMBRELLA INSURANCE?
Most homeowners and auto policies will cover what you need. But, accidents happen, and they can be expensive if you’re held responsible for property damage or injuries. Umbrella insurance covers you above and beyond the limits of those policies (or some situations not covered by other types of policies) for coverage for those “just in case” situations, so really a PUP can benefit almost anyone.
An umbrella policy also typically extends to other members of your household, such as a spouse or children, who do not have auto or property insurance in their own name. So, your policy may be able to help protect them as well.
HOW MUCH DOES AN UMBRELLA POLICY COST?
The cost of an umbrella policy depends on factors like:
- How much coverage your policy has.
- Your location.
- The number and types of vehicles you own.
- The number of houses you own.
- And others.
It’s important to work with your insurance agent to understand if you need umbrella insurance and to purchase a policy that’s right for you.