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Many people
need a personal liability umbrella policy. Umbrella
policies supplement the liability coverage you already
have through your home and auto insurance and provide
an extra layer of protection. They're for anyone who
has assets that might be at risk if they cause a serious
accident.
If you don't have enough liability
coverage to resolve a claim or a lawsuit, the person
bringing the action might go after your home or your
other assets to pay for damage. Umbrella policies cover
damage claims that you, your dependents, or even your
pets may cause.
How it works
Usually, umbrella policies take effect
after the liability insurance in your homeowners and
auto policy runs out. For example, if you have a home
insurance policy with liability coverage of $100,000,
the umbrella policy will pay claims above that amount
up to the limit selected.
Additionally, it will provide coverage
over and above the amount you're entitled to under your
auto policy. Because your auto or home insurance policy
will pay out first, they're considered primary to the
umbrella policy. Most of the risk is assumed under the
primary policy, which explains why the personal liability
umbrella is so cheap. You can buy a $1 million or larger
umbrella policy for less than $200 a year.
It's more than just liability coverage
When you buy a personal liability
umbrella, you're getting more than just higher liability
limits. You're also buying broader coverage in case
you're sued. The company selling the umbrella policy
agrees to cover you if you cause bodily injury, property
damage, or personal injury.
It's the personal injury protection
that goes beyond the coverage in your auto and homeowners
policy. Generally, personal injury encompasses false
arrest, false imprisonment, malicious prosecution, defamation,
invasion of privacy, wrongful entry, or eviction. Most
primary policies cover bodily injury and property damage,
but not personal injury. Certain umbrella policies also
provide coverage if you face liability arising from
your service on the board of a civic, charitable, or
religious organization.
Protection against claims and lawsuits
does more than simply pay for the damages. Even if a
lawsuit is frivolous, you still face the expense of
defending yourself. Your liability coverage will pay
for lawyer fees and defense costs, which can add up
quickly.
They don't cover everything
You can't protect yourself against
every possible claim or lawsuit. There will be exclusions
in the umbrella policy, just as there are exclusions
in every insurance policy.
Typically, the umbrella won't cover
claims arising out of a business endeavor. If you own
a business, even a small one, you'll need to buy a business
insurance policy in order to be covered against liability
claims.
Depending on the law in your state,
the umbrella policy won't necessarily pay for punitive
damages, either. These damages, above and beyond any
actual monetary losses, are awarded to punish wrongdoers
for their conduct and may not be covered by any insurance
policy. Also, as a general rule, the umbrella policy
won't cover intentional acts, unless there are extenuating
circumstances.
Assess your risk before buying
Although umbrella policies are relatively
inexpensive, the question remains as to whether you
really need one. As with any type of insurance, you
don't want to buy unnecessary coverage. Start by analyzing
your risk of being sued.
If you have a swimming pool, trampoline,
or swings in the backyard that pose a danger. If you
have frequent visitors to your property, there's a risk
of accidental falls. Maybe you're a golfer who narrowly
misses hitting someone during every round.
On the other hand, your personal situation
may make lawsuits extremely unlikely. Maybe you don't
own a breed of dog that's a threat to anyone, unless
it manages to lick someone to death.
Before making your decision, compare
the umbrella premium with the cost of raising the liability
limits in your homeowners and auto policies. Then contact
Thomaston Insurance to see how we can help provide you
with the coverage that's right for your particular situation.
For more information, call 860-283-0278
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