Umbrella/Excess Liability coverage
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Understanding Umbrella Policies
Personal umbrella liability insurance is
designed to protect you against a catastrophic lawsuit or
judgment. It provides expanded coverage and increases the
amount of your liability protection beyond the basic
coverage provided under your homeowners/renters and auto
Unlike other types of liability coverage,
personal umbrella liability insurance can be purchased as a
separate policy. However, your insurer will require that you
have underlying basic liability coverage (homeowners/renters
insurance, auto insurance, or both) before you can purchase
an umbrella liability policy. If you are found to be legally
responsible for injuring someone or damaging someone's
property, the umbrella policy will either pay the part of
the claim in excess of the limits of your basic liability
coverage, or pay for certain losses not covered by your
basic personal liability insurance.
Why would you need it?
Standard homeowners policies
usually provide $100,000 to $300,000 worth of liability
coverage. As well as the fact that most states now require
you to carry auto insurance with minimum liability coverage
(which varies from state to state). It is possible to
purchase additional liability coverage under these policies,
but amounts may be limited. In today's society, it's not
unusual to hear of $1-million, $2-million, and even
$10-million liability judgments against individuals. If
someone is injured in your home, or if you cause a serious
auto accident, you could be hit with such a judgment.
Without a personal umbrella liability policy, anything
beyond the liability coverage limits of your
homeowners/renters or auto insurance policy will have to
come out of your pockets.
How does it work?
Personal umbrella liability
insurance supplements the basic liability coverage provided
by your other insurance--it's designed to kick in when your
other liability coverage is tapped out. Depending on the
type of claim against you, your homeowners, renters, auto,
or boat insurance coverage would be utilized first. Once the
basic liability limit under the applicable policy is
reached, your personal umbrella liability policy covers the
remaining costs, up to the policy limits. For this reason,
umbrella liability insurance usually carries a high
deductible. Insurance companies typically require you to
have homeowners/renters and auto liability insurance equal
to the amount of your personal umbrella deductible.
What does it cover?
A typical personal umbrella
liability policy provides the following protection, up to
the coverage limits specified in the policy:
- Protection for claims of personal
injuries or property damage caused by you, members of
your family/household, or hazards on your property, for
which you are found legally liable
- Personal liability coverage for
incidents which occur on or off your property
- Additional protection above your basic
auto policy for auto-related liabilities
- Protection against non-business-related
personal injury claims, such as slander, libel, wrongful
eviction, and false arrest
- Legal defense costs for a covered loss,
including lawyers' fees and associated court costs
What doesn't it cover?
Personal umbrella liability
insurance typically provides extremely broad coverage.
Furthermore, if something is not expressly excluded from
coverage, it is covered. Although exclusions can
vary, the following are some items typically excluded from
- Intentional damage caused by you or a
member of your family/household
- Damages arising out of business or
- Liability which you accept under the
terms of a contract or agreement
- Liability related to the ownership,
maintenance, and use of aircraft, nontraditional
watercraft (jet skis, air boats, etc.), and most
- Damage to property owned, used, or
maintained by you (the insured)
- Damage covered under a workers
- Liability arising as a result of war or
How much should you buy?
There is no exact science when it
comes to determining the appropriate level of personal
liability insurance coverage. You might think that you only
need enough liability insurance to protect your assets, but
this figure is practically irrelevant when deciding how much
liability coverage you need. A large judgment against you
could easily wipe out your assets and put your future
earnings in jeopardy. Instead, consider factors such as how
often you have guests in your home, whether you operate a
home-based business, how much you drive, whether you have
teen drivers in your home, and whether your lifestyle gives
the impression that you have "deep pockets."
Coverage limits vary, but a typical policy
will provide $1 million to $10 million worth of liability
coverage. Of course, as your coverage limit increases, the
premium will also increase.
Please Note: The information contained in this website is provided solely as a source of general information and resource. It is a not a statement of contract and coverage may not apply in all areas or circumstances. For a complete description of coverages, always read the insurance policy, including all endorsements.