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Protect yourself with an umbrella insurance policy


I often tell my clients that an umbrella insurance policy is the smartest insurance dollars you can spend to protect yourself. Low premiums can provide you $1M + in coverage. In this sad, but litigious world we live in, spending a small amount per year to protect yourself for $1M against a lawsuit is well worth it. Like forgetting your umbrella at home and getting caught in the rain, an umbrella policy is something you don’t want to get caught without.

Many clients assume that umbrella insurance is only for millionaires, but anybody can benefit from the additional protection it provides. Paying a small, yearly insurance premium is much better than having to pay someone else medical bills because you were negligent in a loss and your home or auto policy liability limits are too low.

What is it?

You likely already have homeowners and auto insurance. An umbrella policy provides additional coverage above and beyond more traditional insurance policies. Think of it as your second line of defense if the underlying policy coverage is not high enough. The best part about umbrella insurance? It is added protection if your other coverages run out.

Why do you need it?

You might not know it but engaging in everyday activities can put you at risk for a lawsuit. For example,

  • Do you have a swimming pool?

  • Do you frequently have guests in your home?

  • Do you own recreational vehicles like jet skis, snowmobiles, or ATVs?

These activities could lead to someone getting injured and suing you. To minimize your risk, consider a personal umbrella liability policy. For example, let’s say someone is walking on a sidewalk in front of your house in January. They slip and fall on the ice, breaking their leg. They are now unable to work while they heal. They sue you for the injury and lost wages. Your homeowner’s insurance might not cover all of this, but your umbrella insurance will.

If you’re still on the fence about why you need umbrella insurance, here are a few reminders:

  • If someone sues you, it’s probably for a large amount of money. You can help mitigate this risk with umbrella insurance. Remember, your dog biting someone on your walk could lead to large financial losses if you’re not insured.

  • Umbrella insurance premiums are inexpensive. Typically, it can be easily added to your personal insurance portfolio.

  • You will have peace of mind knowing you are covered.

What does it cover?

The beauty of umbrella insurance is that it covers a laundry list of potential risks. Depending on your carrier coverage, it can sometimes cover you worldwide. It can cover you in case of issues with swimming pools, domestic workers, non-profit board participation, rental property ownership, animals, kids, hosting parties and traveling. Anything that could get you into legal trouble, an umbrella policy can protect you. This includes:

Injury – From dog bites, car accidents where you’re at fault or someone being injured on your property. It can cover the cost of medical bills and liability.

Property damage – It can cover costs associated with damage to someone’s property. This includes damage to vehicles and other property where you are at fault.

Rental units – Are you a landlord? An umbrella policy can help protect you from liability as a landlord. Given that you own the property, you face similar liability to your own home such as someone tripping and get injured.

Considerations for your umbrella policy

Your umbrella insurance needs will depend on your lifestyle. A $1 million limit is typical, but higher limits are available if needed. You can discuss your appropriate coverage amount with your insurance professional. It’s important to note that as your assets and wealth grow, so should your umbrella coverage. Work with an insurance advisor to determine the best limit for you.