When you think of the word insurance, what words come to your mind; Protection, security, peace of mind. This is what every human being longs for throughout their life. People get insurance to protect themselves from experiencing financial hardship.

Umbrella insurance coverage is excess liability coverage, meaning additional coverage. If you have this kind of insurance policy, the limits on your umbrella policy will kick in once the limits on your auto, home, or watercraft insurance policies become exhausted. Umbrella policies come in handy when you are faced with an expensive situation.

  • You cause a serious auto or boat accident
  • Your dog bites someone
  • You drive your car into a building
  • You accidentally injure someone

Umbrella policies can cover you for situations where a home or auto policy cannot. For example, if you are ever sued for libel, slander, or defamation, an umbrella policy can help cover these costs.

Liability insurance only covers you for as much as is written in your policy. For example, let’s say you cause an auto accident where the driver of the other vehicle is seriously injured. Their injuries are serious enough to require lengthy hospital stays. In fact, their medical bills total $400,000. Your auto policy only covers a maximum limit of $300,000 in liability insurance. How are you going to cover the remaining $100,000? Your umbrella policy can cover the remaining costs. This is just one reason why it is such a good idea to obtain umbrella insurance coverage.

What An Umbrella Insurance Policy Won’t Cover

  • Damage to your personal belongings
  • Business losses
  • Criminal acts
  • Written or oral contracts
  • Intentional acts or injury
  • Damage due to nuclear radiation, war or terrorism
  • Communicable disease, such as a lawsuit against you for giving someone an STD

Umbrella insurance also covers you for situations that are not typically found in an auto or home insurance policy. For example, in this day and age, countless people use social media. If you were to post something defamatory about another person online, you could potentially be used by that individual. Other instances might include false arrest, imprisonment or detention, malicious prosecution, wrongful eviction or entry, and invasion of privacy.

Do You Need Umbrella Insurance?

Obviously, the choice is ultimately yours, but it is wiser to have excess insurance than not enough. There are just too many circumstances you may find yourself in life that are beyond your control. Additionally, if you are someone who is well known in the world, like a celebrity or someone with a high status in society, you may be a target for people coming after your assets.

How Much Umbrella Coverage Do I Need?

Determine the value of your assets. Umbrella insurance coverage—at the very least—should cover your net worth. This is what you could potentially lose should you ever face a lawsuit.

Another consideration you should think about is your future income loss. How much do you think you stand to lose if you are faced with a catastrophic lawsuit? If you injure someone in an auto accident that leaves them paralyzed and unable to work, that person may sue you for all of the future earnings they have lose being unable to work.