Millions of people across the country possess homeowners’ insurance to protect their homes and belongings, and even a greater number of people carry automobile liability insurance to protect them financially in the event of a vehicle collision of some kind. However, only a small fraction of people in the United States take the necessary step to cover themselves for events that fall outside of the limits of these two categories—a type of insurance coverage known as Personal Umbrella Insurance.
What Exactly Is Personal Umbrella Insurance?
Personal Umbrella Insurance is a type of comprehensive liability coverage that protects individuals in the event of a major injury, a lawsuit or a major claim. This type of insurance focuses on two major coverage types: coverage for claims that are above and beyond the limits of other (more popular) types of insurance policies; and coverage for claims excluded by those same polices.
Examples of circumstances that could be covered under personal umbrella liability insurance include injuries, property damage, lawsuits and situations involving personal liability. This coverage goes beyond the traditional coverage limits and circumstances offered by standard insurance policies.
Circumstances in which personal umbrella liability coverage may come into play for liability purposes include bodily injury liability, such as when a person has been harmed because of a pet, or when a guest has fallen in a home or yard, or when a serious auto accident resulted in injuries and the policy holder is considered at fault. Damages that occurred at rental units owned by the policy holder may also be covered under personal umbrella liability coverage. Examples of this include lawsuits filed when a tenant’s pet harms another person or someone falls on the rental property.
What Are the Benefits of a Personal Umbrella Insurance Policy?
According to the informative website Insurance.com, the primary benefit of a personal umbrella insurance policy is that it extends someone’s personal liability coverage beyond what a standard home or auto policy provides. Higher personal liability protection increases the financial coverage in a worst-case scenario situation, and reduces the risks of financial ruin which may arise from liability lawsuits.
According to that same website, a home insurance policy typically protects individuals for approximately $300,000 when liability is established. As a result, insurance providers like Dewey Insurance typically encourage people to buy umbrella policies that extend liability coverage to at least $1 million—a protective measure that, for a minimal cost, could wind up saving someone hundreds of thousands of dollars. An umbrella policy picks up legal defense fees and settlement or judgment costs that exceed the benefits in a home or auto plan.
Experts encourage people with greater liability risks, and/or a high number of financial assets to protect, to consider coverage benefits ranging from $2 million to $5 million. Another major benefit of personal umbrella coverage is that it’s relatively affordable. A $1 million plan, for example, ranges from $150 to $300 a year in annual premiums, as of January 2015. Moreover, it costs only approximately another $100 a year for each additional $1 million in personal umbrella coverage beyond that amount.
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