Say you are on a dream vacation on the Florida coast and you rent a jet ski for an afternoon of wet and wild entertainment. Who knew those machines could move so fast, even in pitching seas. Then, look out! Your vacation suddenly goes further south when you hit another tourist and his leg is maimed.
If you think the insurance on your home will protect you against the ensuing wave of medical bills, lost wages and imminent lawsuit, you will be mistaken. Since the jet ski was rented, your homeowners insurance likely won't cover it. You could face financial ruin due to a legal judgment – unless you have umbrella insurance.
Umbrella insurance is simply extra coverage over and above your auto and homeowners policies. If you own property or have investments and other assets that are worth more than the liability limits under those policies, you may want to consider umbrella insurance. It covers events that may not be covered under those policies, such as the jet-ski scenario above. And it can pay for damages that may exceed the dollar limits on those policies, for example the jet ski lawsuit for pain and suffering.
Umbrella insurance supplements your homeowners and auto coverage in the event that your existing coverage is not enough to protect you. It starts to pay after the limits on another policy have been exhausted or when the other policy won't cover a claim in the first place.
Umbrella insurance is also referred to as 'excess liability coverage.' The term "excess" in this case doesn't mean more coverage than you need. It means more coverage than you currently have. But just what is "excess" in this day of lawsuits? One could argue that, in terms of protecting your property from a lawsuit, there is simply no such thing as too much coverage.
Umbrella insurance is not expensive. Usually for dollars per month, you can add a million dollars of protection to your car insurance and home insurance.
Umbrella insurance offers liability protection worldwide, so when you travel to a foreign country, you know you have auto and personal liability insurance.
Umbrella insurance protects against a broader list of personal injury situations than your homeowners insurance can, including libel, slander and invasion of privacy. Also, if someone makes accusations of humiliation or intentional infliction of emotional distress (think "bullying").
If you hire a nanny or housekeeper or gardener, your umbrella insurance will pay for their medical care and other costs if they are injured in an automobile accident while running errands for you.
Owning umbrella insurance shows you are aware of the potential risks to everyday life, and you have taken steps to protect yourself.
How much umbrella coverage you may need depends on a few things, including what your assets are worth. How much liability insurance you already have is also factored in since that will be used first in the event of a claim. If you have substantial liability coverage under your homeowners insurance, you will need less umbrella insurance. It makes sense, then, that most insurance companies will only offer umbrella insurance to you if you also purchased your homeowners and car insurance policies from them.
Of course, the insurance company will also consider whether you fall into a high-risk group. If you own a swimming pool or a trampoline or many dogs, for instance.
Keep in mind that umbrella insurance is really quite reasonable, so millions of dollars of protection may only cost a few hundred dollars each year. As your assets grow, you may decide your umbrella insurance needs have increased too. We can discuss your situation personally and determine an amount that's right for you.
As with most insurance, it's not necessarily fun to consider the ways an umbrella insurance policy would become useful. The key is to think about how you would cope financially if you are NOT protected. Contact us today, and we can discuss your unique situation and offer a range of solutions to choose from. We work with many insurance companies, and we can find the one that's right for you and your family.
At Stonewall Insurance, we pride ourselves in helping friends and neighbors decide which insurance coverage is best for them. It might be car insurance, homeowners insurance, condo coverage, business insurance, umbrella insurance and more. If you have something you need to insure, we are the local independent insurance agency for you. Call us today at (413) 566-0091.