What Is Umbrella Insurance?
Umbrella insurance is liability insurance that protects you and your assets from claims and lawsuits beyond your standard homeowner, condo, car, watercraft or other personal insurance policy limits. Umbrella insurance is designed to give you added liability protection from claims that may arise against you. If you own property or have other assets that you want preserved, umbrella insurance is an inexpensive way to protect your financial future or established assets.
What does it cover?
If you or someone in your household causes harm to another person or their property, umbrella insurance may cover the legal fees associated with defending yourself in a lawsuit. If you happen to lose the suit, umbrella insurance may also cover the portion of a settlement or judgment that exceeds your home or auto insurance liability limits. If an insured, spouse or resident relatives (children/elders) are involved in a mishap causing damage or injury, umbrella insurance may also cover them. Whether you’re sued for slander, libel, personal liability, false arrest, detention, imprisonment, malicious prosecution, etc., you can rest easy when you have umbrella insurance.
Risk factors that increase the need for umbrella insurance:
The following risk factors that increase the need for umbrella insurance are broken into two categories – risks relating to physical injury or damage and risks that are non-physical, such as slander.
Entertaining guests: If you’re a frequent entertainer of guests, it’s likely there is alcohol involved or a heightened risk of accidents happening. If anyone accidentally or purposefully injures themselves or others on your property, you’re on the hook for it.
Rental Properties: If you own rental properties, you are responsible for the tenants that reside within. If anything goes wrong, you’ll need to be covered.
“Toys”: Cars, trucks, SUVs, ATVs, and other performance vehicles are generally riskier possessions due to the increased accidents associated with them.
Vacant land: If there is public access to your land or you lease it out for hunting, you may be liable for physical injuries on your land. Even uninvited can sue for damages.
Client visits at home: This is another situation in which you’re inviting guests into your home where there is a possibility of injury or damages.
Home renovation: Renovations invite an increased risk of injury that home construction insurance may not cover. Multiple people on a job site, using dangerous tools, in a variety of elements could spell disaster for the homeowner.
Swimming Pools/Trampolines: These backyard entertainment features also carry injury and lawsuit risk because they’re magnets for kids. Whether invited or not, kids may find a way to get into trouble with these items and you’ll be liable.
Dog: Sometimes dogs can be unpredictable, because after all they are animals with minds of their own. Regardless how much you trust Mr. Wiggles, he could cause an injury to someone or permanent disfigurement.
Teenage Driver: Teens have the most frequent & severe accidents, which is no surprise considering the number of distractions they have these days. The cost of insuring a teenage driver under an umbrella policy may also depend on the number of (teenage) drivers.
Board of Directors participation: If you are part of the board for a charity or non-profit organization, you may need personal liability coverage.
Social media: Trashing companies or individuals can lead to a lawsuit.
Prominence: Having a public profile may mean you are at higher risk for a lawsuit and may have more to lose.
What are the risks of not having umbrella insurance?
Without umbrella insurance, you risk losing all of your money and assets, future income, children’s college funds, retirement savings, and more. Even though you may be just starting out, or have no established assets, the judge will still award benefits if you’re held liable for damages. When you have no assets, you’ll have to pay off the damages awarded with your future earnings. If you’re a student studying for your degree, or even if you expect to eventually be promoted and work your way up to a high paying position, your future earnings can be taken from you all because you don’t have a little extra protection.
Although the likelihood of being the cause of a severe injury or significant damage is relatively low, it is high enough to give umbrella insurance serious consideration. A good insurance policy is great, but not having enough can put you in an impossible situation should the unimaginable happen.
What are the requirements?
Umbrella insurance is a secondary or excess liability coverage that requires a primary policy be procured first. Usually acquiring an excess liability coverage requires having a base level of liability coverage for both home and auto insurance policies, however, this varies by insurer. Contact one of our advisors for requirement and coverage information specific to your needs.
How much does it cost?
Premiums differ by the amount of coverage you’re seeking, but the minimum coverage starts at $1 million dollars for as little as $100 per year. Bottom line – We live in a society where the number one way of getting rich is from suing someone, and if nothing else, an umbrella insurance policy can offer you a bit more peace of mind knowing you have some protection against losing everything you have worked (or will work) so hard for.
If you’re looking for an Iowa insurance agency that goes above and beyond to protect you, look no further than The Accel Group. Contact us for all your personal liability insurance needs.