Umbrella Insurance

Who needs umbrella insurance

What is Renter's Insurance?

Umbrella insurance is not required. It’s commonly purchased by people who:

• Own property.
• Have significant savings or other assets.
• Are worried about liability claims against them when they travel outside the U.S.
• Own things that can lead to injury lawsuits such as pools, trampolines and dogs (check with your insurer to make sure your breed is covered).
• Engage in activities that increase your chances of being sued, such as:
• Being a landlord.
• Coaching kids’ sports.
• Serving on the board of a nonprofit.
• Volunteering.
• Regularly posting reviews of products and businesses.
• Participating in sports where you could easily injure others (skiing, surfing, hunting, etc.).

Umbrella Insurance

Pros

Provides extra liability coverage and legal defense costs once the limits of your auto, home, or other insurance your company might include, such as boat or motorcycle, have been exhausted.

Covers incidents that your main insurance might not, such as libel and slander.

Coverage limits start at $1 million — a decentcushion right off the bat.

Coverage often applies anywhere in the world.

Covers certain rental items for which you don’t have insurance, such as a boat.

Inexpensive for the amount of liability insurance you’re getting.

Cons

You must already carry auto or property insurance, usually homeowners, to qualify.

You must buy a minimum amount of auto and/or home insurance liability coverage before you can add umbrella coverage.

How umbrella insurance works

To get a better sense of how umbrella insurance can come in handy, imagine the following scenario:

You run a red light and accidentally T-bone another car. There is significant damage to the vehicle, and several people are injured. The car needs $50,000 in repairs, and treatment of the injuries totals $250,000. Plus, the driver of the other car is an orthodontist who won’t be able to work for months due to a broken arm and sues you for $200,000 in lost earnings.

Think of umbrella insurance — sometimes called excess liability insurance — as a fail-safe for your savings and other assets.

You’re on the hook for a grand total of $500,000. If you carry only $300,000 liability coverage with your car insurance, the remaining $200,000 will have to come out of your pocket.

If you have umbrella insurance, it would pay the difference between what your primary insurance covers and what you still owe.

Inside an umbrella insurance policy

Umbrella Insurance Pays For:

• Others’ injury treatment and funeral costs.

• Others’ property damage.

• Lawsuits involving slander, libel, defamation of character and other personal attacks.

• Your legal defense costs.

• Injuries or property damage suffered by a tenant if you’re a landlord.

Umbrella Insurance Doesn't Pay For:

• Your own injuries.

• Damage to your personal belongings.

• Others’ injuries or property damage that your business is liable for.

• Intentional or criminal acts.

• Property damage or injuries you cause while using certain recreational vehicles, such as an all-terrain vehicle or Jet Ski (this can vary by insurer).

How much umbrella insurance do you need?

It’s wise to buy at least enough umbrella insurance to cover your net worth. This includes your savings, other assets and income. You may also want to include potential income if you’re likely to earn much more in the near future than you do now — if you’re a medical student, for example.

It’s difficult to pinpoint exactly how much umbrella insurance is the “right” amount, because you don’t know how much a potential worst-case lawsuit could cost you. Umbrella policies typically start at $1 million in coverage, so you get a decent amount no matter what you choose.

Cost of umbrella insurance

It’s wise to buy at least enough umbrella insurance to cover your net worth. This includes your savings, other assets and income. You may also want to include potential income if you’re likely to earn much more in the near future than you do now — if you’re a medical student, for example.

It’s difficult to pinpoint exactly how much umbrella insurance is the “right” amount, because you don’t know how much a potential worst-case lawsuit could cost you. Umbrella policies typically start at $1 million in coverage, so you get a decent amount no matter what you choose.

Would you like an Business Insurance Quote?

Get your quote in minutes and save money!


Machado Insurance finds the best quote for you available within our family of insurance companies networking and match your budget