How to Determine if You Need a Personal Umbrella Policy

08/25/2020 Written by: Richard Baskind, Nancy Hill

Do you own a home, car, boat, ATV, or golf cart? Do you have kids, pets, a pool, new drivers, parties at your home? Do you own rental properties, volunteer on a board, travel or use social media? Have you rented a boat, jet ski or other recreational vehicle on vacation? Do you have additional assets such as future income, investments, bank accounts, and retirement accounts? If you answered yes to any of these questions, you need an Umbrella (or Excess) Liability Policy.An Umbrella (or Excess) Liability policy covers injuries or damage you cause to others and will defend you if you are sued. Many insurance carriers offer defense coverage outside of the selected policy limit which is key. The policies will respond if the liability limits on your home or auto policies are not sufficient to pay for the injuries or damage you cause to others. Consider these scenarios:

  • A single auto accident where you are at fault involving multiple vehicles, several people with severe injuries or death can easily exhaust a $500,000 liability limit on your auto policy — just consider the cost of a lengthy hospital stay and overall rising medical care.
  • A pot left on the stove in your condo starts a fire that spreads to other units causing fire or water damage to the other units or to the building itself—damages can be much more than the liability limit available on your homeowners’ policy.
  • A social media post by you or your child prompts someone to respond with a lawsuit.
  • Your dog bites a visiting child or the FedEx delivery person.

Umbrella (or Excess) Liability coverage can be purchased in $1M increments from your home or auto insurer, or from separate specialty carriers (if necessary), at a very reasonable cost (often under $300 for one house and two cars). Coverage through many carriers is provided on a worldwide basis and limits up to $50M or more may be available depending on the carrier and underwriting criteria.
Many insurance companies offer an important optional coverage that is added to the Umbrella or Excess Liability policy called “Excess Uninsured/Underinsured Motorist Coverage or UM/UIM.” This should be added at every opportunity when available. This coverage pays for YOUR injuries from an accident caused by an uninsured, underinsured or hit and run driver (while you are in a vehicle, on a bike or as a pedestrian). As many as one in seven drivers nationally may be uninsured, and many more drivers carry state minimum liability limits only, which could be as low as $10,000 per person (FL). If you are seriously injured by one of these drivers, your Uninsured/Underinsured Motorist coverage on your own auto policy may not be adequate to pay for your injuries. The UM/UIM coverage on your Umbrella/Excess Liability Policy would then kick in.
We can’t control who is insured and what coverage limits they carry, but we CAN protect ourselves and sleep at night with an Umbrella or Excess Liability Policy with Uninsured/Underinsured Motorist coverage included. To learn more about personal umbrella and excess liability policies, visit AssuredPartners Personal Insurance or contact your insurance advisor.
Please note that Personal Umbrella and Personal Excess Liability policies require minimum underlying personal liability limits to avoid a gap in coverage. These required limits differ by carrier, policy form and state of issuance. Please make sure to consult with your insurance advisor to review ALL of the requirements. Please also refer to the specific policy language for all coverage questions and possible policy exclusions.

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