Between homeowners insurance, auto insurance, watercraft insurance, business insurance, and more, insurance policies are designed to cover just about everything under the sun. But what happens if you were to be held responsible for an incident that was beyond what conventional insurance covers? Though these circumstances are rare nightmares, they would be nightmares nonetheless. Umbrella insurance is designed to cover exactly that.
Weed Ross specializes in a plethora of insurance types, and that’s because we’re an insurance agency, which differs from a carrier. But as a local insurance agency, we partner with over 40 of the top insurance carriers in the nation, and we’ve come to learn a few things about even the most unique insurance-related scenarios. Umbrella insurance isn’t something that everyone encounters, but it may be something worth considering. Below, we dive into the details of umbrella insurance—welcome to Umbrella Insurance 101.
In this article, we will cover:
- What Is Umbrella Insurance?
- How Does Umbrella Insurance Work?
- Who Should Consider Umbrella Insurance?
- How Much Does Umbrella Insurance Cost?
What Is Umbrella Insurance?
Umbrella insurance is a form of personal liability protection that offers coverage for claims that arise that are in excess of traditional insurance policies. Insurance like homeowners, auto, business, watercraft, or renters insurance policies cover a strategic range of incidents and are designed for the most common types of occurrences. Umbrella insurance takes it a step further, picking up where these insurances leave off.
Umbrella insurance covers all kinds of accident scenarios, and it can even provide coverage for liability claims that affect other members of the household, businesses, or entity. Umbrella insurance even goes so far as to cover liability claims related to slander or false imprisonment. This extra layer of insurance protection doesn’t stop at the policyholder; it covers anyone under the “umbrella.”
How Does Umbrella Insurance Work?
Let’s look at a couple of examples of how an umbrella insurance policy might work for you. Conventional homeowners insurance might not cover you if your child gets into a fight at school or if your dog runs out of your yard and bites a passerby, but umbrella insurance will. In a business example, traditional business insurance policies may not offer coverage if someone is injured in a company party outside of normal operating hours, but umbrella insurance can. Simply put, umbrella insurance goes beyond the normal means of insurance policies and covers a variety of extenuating circumstances and expensive lawsuits.
Why Do I Need Umbrella Insurance?
Umbrella insurance is a type of protection worth considering if your total amount of liability outweighs the total value of assets you might have to offer, which is typically rare. But in a lawsuit-happy world, where being sued is increasingly common, you just never know. Realistically, the more likely you are to be sued, the more appropriate an umbrella insurance policy becomes. To give a few examples, you may want to take a look at umbrella insurance options if:
- you own rental property
- You are a well-known public figure
- You own a dog
- You employ a household staff
- You have a teenage driver in the household
How Much Does Umbrella Insurance Cost?
Umbrella insurance is actually not as expensive as you might think, especially given that it covers excessively expensive lawsuits. But like many policies, umbrella insurance depends on several factors, such as how much coverage you purchase, how much risk you’re up against, and how many members of the house or business are involved. It’s important to note that umbrella insurance is also essentially an add-on, so you’ll likely need to carry the maximum base insurance coverage before you can qualify. But typically, an umbrella insurance policy often only costs between $50 and $300 extra per year.
Still have questions about umbrella insurance? Expecting a major downpour in the near future? Talk to us! Here at Weed Ross, we’re local and ready to help.