Personal Umbrella Insurance is designed to protect you against a catastrophic lawsuit or judgment. Umbrella policies supplement the liability coverage you already have through your home, auto, and boat insurance and provide an extra layer of protection.
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. Your liability coverage pays for lawyer fees and defense costs, which can quickly add up.
The personal injury protection under umbrella policy offers coverage not found in your auto and homeowners policy. Personal injury includes 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.
One of the greatest things about Personal Umbrella is that you get so much coverage for your money. Coverage starts at $1 million, but you can go as high as $5 million. The total annual premium for a $1 million umbrella is very affordable. Dollar for dollar, the umbrella policy may be one of your best insurance buys.
Umbrella liability insurance can be purchased as a separate policy. However, insurers require that you have underlying basic liability coverage (homeowners/renters insurance, auto insurance, or both) before you can purchase an umbrella liability policy.
Even if you buy the top-of-the-line personal liability umbrella policy, 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 covered against liability claims. If the court assesses punitive damages against you, your umbrella insurance won’t pay those damages. Also, as a general rule, the umbrella policy won’t cover intentional acts.
Deciding the right amount of liability coverage is not an exact science. A common approach or general rule of thumb is to add up all your assets. Whatever that figure turns out to be is an approximate minimum amount of needed liability protection.