All You Need to Know About Umbrella Insurance- A Guide

Jan 20, 2021

Umbrella Insurance

All You Need to Know About Umbrella Insurance- A Guide

Do you wonder why you might need extra insurance protection when you already have a basic personal liability policy? Looking at this umbrella insurance guide will provide some answers. Typically, umbrella insurance takes care of uncertainties your primary coverage couldn't.

What is Umbrella Insurance?

Umbrella insurance is additional liability coverage you could use to pay for costs beyond the limits and coverage range of your other base policies. It closes many insurance coverage gaps that could otherwise have you spending out of pocket to fulfill your personal liabilities.   

This is not to say that your basic personal liability policy is always inadequate. However, you can't rule out the slim possibility of losing a lawsuit for an amount that exceeds your existing liability protections. While rare, such an eventuality could set you back thousands of dollars. Having umbrella insurance on hand can rescue you from such a dire situation.

This umbrella insurance guide answers essential questions like how umbrella insurance works, what it covers, and who needs it.

How Does Umbrella Insurance Work?

Before you can purchase umbrella insurance, you need to have a basic liability cover, such as homeowners, boat, or auto insurance. These base policies cover your liabilities up to a specified limit. So, if someone successfully sued you for liability amounts beyond the limit on your policy, you could use umbrella insurance to meet your extra financial obligations.

Umbrella insurance can also cover you for risks not included in your existing personal liability policy. It could pay your legal costs if you're successfully sued for slander or libel.  

This scenario might shed more light on how the extra protection works:

You're hosting a party at home. A child of one of your guests is injured from a slip and fall accident near your swimming pool. While your homeowners liability insurance component is worth $100,000, the kid's family successfully sues you for $200,000 in treatment costs.

You have a $100,000 coverage gap, which could deplete your savings if you had to pay for it out of pocket. However, with an umbrella coverage, you can easily pay for the difference.   

What Is Covered By Umbrella Insurance?

This policy covers most liabilities included in your existing policies. Its extra protections include:

  • Coverage for you and your family members if found liable for personal injury to others or damage to other people's cars or other types of property.
  • Coverage for settlements arising from defamation claims against you or a member of your household.
  • Pays for your personal injury attorney fees if the compensation amount you owe your accuser exceeds the limit on your personal liability cover.
  • Your teenage son is liable for auto accident injuries to multiple motorists. Treatment costs exceed your policy's limit, so umbrella insurance closes the deficit.

Who Needs Umbrella Insurance?

Umbrella insurance is a safety net that can prevent you from plunging into financial distress when your personal liabilities exceed your existing insurance protection. While the cover is optional, it could be beneficial if:

  • You own a home
  • A member of your household, such as a teenager, is an inexperienced driver
  • You're exposed to multiple liabilities, like owning a swimming pool or guns
  • You're a kids' sports coach
  • You own rental property
  • You have a lot of personal assets that elevate your risk of being sued

Hopefully, you can now make an informed decision on getting an umbrella insurance cover to complement your primary policies. For help finding the right umbrella insurance policy to best suit your needs, contact the insurance professionals at CV Mason Insurance Agency in Bristol, Connecticut. As an independent insurance agency with a team of friendly and helpful experts, we are ready to secure your needed insurance coverage.