Homeowners insurance is a must-have in today's world, but is it enough? To ensure maximum protection of your personal belongings, an umbrella insurance policy is often the way to go. Not every disaster is covered in a standard homeowners insurance policy, whereas an umbrella insurance policy has much broader coverage. Use this umbrella insurance guide to help determine the type of coverage you need.
Basics of Umbrella Insurance
Sometimes referred to as personal liability insurance, umbrella insurance is meant to supplement an individual's basic coverage. While it's not the same as excess liability insurance, it provides similar benefits. It can pay for damages from lawsuits that aren't covered by a standard homeowners policy, including paying for legal fees as well as damages.
Suppose you cause an accident on someone's property in which the cost of damages exceeds your basic liability limit coverage. In that case, you will be held responsible for paying the difference out of your pocket. Umbrella insurance can help protect you and cover some or all of the costs that your basic policy won't cover. Umbrella insurance can also pay the difference for automobile accidents as well.
Umbrella Insurance Coverage
Umbrella insurance protects you and members of your household against lawsuits filed by plaintiffs who claim you've damaged their property. It can also cover cases involving defamation, landlord liability, and false imprisonment, based on what the policy specifies.
The exact coverage amount varies depending on your policy, but the way it works is the same. Suppose the umbrella policy is written to cover $1 million in liabilities, and you are sued for the same amount. In this case, the policy would pay for the full amount in addition to legal fees. In some cases, you may have to pay a "retained limit," which is similar to a deductible in which you pay a certain amount before the coverage kicks in and takes care of the rest.
Umbrella Insurance Limitations
Like all types of insurance, umbrella insurance only covers so much. It won't cover your injuries or damage to your property, but those scenarios can be covered by other types of insurance. Umbrella insurance also does not cover liability issues involving your business unless you've signed up with a commercial policy.
There are specific scenarios where an umbrella policy will not pay, such as lawsuits in which you are in breach of a signed contract. It also will not cover the damage caused when you deliberately injure someone or are involved in a crime.
Is Umbrella Insurance Important for You?
Property owners are the most likely candidates who should consider buying umbrella insurance, especially if they are landlords. You can also benefit from such coverage if you've built a large savings account or other valuable assets that can be seized through court action. It is important to protect those assets.
Umbrella insurance is also important for pet owners and parents. Pet owners - particularly those who own large dogs – should consider this insurance to protect themselves in the event their dogs attack someone. You may also need the coverage if you have children who can potentially damage your neighbor's property in some way, whether intentional or accidental. Even if you don't have children, the potential to accidentally damage your neighbor's property can happen in many other ways. If you like to invite guests over for a party and a guest accidentally wrecks part of the neighbor's property, an umbrella insurance policy can help cover those unexpected costs.
Another way to face a surprise lawsuit is if you regularly post negative reviews about a business online. The owner may try to sue you for libel or reputational damage. Umbrella insurance, once again, is the solution to protect you from draining your assets.
Signing Up for Umbrella Insurance
The average cost of an umbrella policy for $1 million in coverage is between $150 and $300 per year. There are certain minimum requirements that you have to meet to add an umbrella policy. A typical requirement includes carrying other policies such as auto insurance, homeowners insurance, or renter's insurance. Adding umbrella insurance to a homeowners policy requires liability coverage for bodily injury of $300,000.
Investing in umbrella insurance is the smart and most effective way to protect all of your personal belongings. To learn more about finding the right policy to fit your business needs, contact the experts at Fuller Insurance
in Southern California today.