Umbrella Policies

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 and/or 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.