umbrella insurance

Why You Need An Umbrella Policy

Imagine your children are outside playing with the neighbor kids on a trampoline. Trampolines, whether they have a net or not, can be a dangerous toy. The neighbor kid falls off and breaks a bone. Your health and home insurance plans don’t cover the damage made to a third party injured on your property. Neighbor kid’s parents want to file a lawsuit. Now what?

Just like no person is perfect, no insurance plan is perfect either. Liability insurance only protects your family so much when it comes to finances and major disasters. That’s where a personal umbrella insurance policy comes in. An umbrella policy is designed to help prevent financial ruin from a catastrophic event that you’re financially responsible for, such as that trampoline incident.

March is National Umbrella Month; what better way to celebrate than learning the ins and outs of why you most likely need an umbrella policy!

What Is Umbrella Insurance?

You can think of umbrella insurance like the friend that will always have your back in times of need. In the unfortunate event that you would be sued for damages that exceed the liability ceiling of your auto or homeowners insurance, an umbrella policy would help cover the rest of what you owe. Umbrella insurance also covers any legal costs in a lawsuit. 

Umbrella insurance takes care of you and members of your household against lawsuits involving personal injury to others, damage to another's property, and an abundance of claims depending on your policy, such as defamation, landlord liability, and false imprisonment.

While umbrella insurance is sometimes referred to as personal liability insurance, it is not to be confused with liability insurance. Umbrella policies will provide additional coverage that may not be included in your base liability insurance policies.

Note: Umbrella insurance does not cover your own injuries or property damage; health and automobile insurance are the coverage needed for those circumstances. Boats, depending on the size, may also not be covered unless you have an existing boat insurance policy. 

Who Needs An Umbrella Policy?

Not everyone needs an umbrella policy, nor is it required by law. However, if you have a lot of assets to protect or are at high-risk for being sued, it might be worth purchasing in the long run. 

You may want to consider an umbrella policy if you have any of the following: 

  • Own property.

  • Own things that can lead to injury lawsuits such as pools, trampolines, guns, or dogs.

  • Are a landlord.

  • Coach kids’ sports.

  • Frequently host parties in your home.

  • Serve on the board of a nonprofit.

  • Regularly post reviews of products and businesses.

  • Participate in sports where you could easily injure others.

If you’re wondering how much umbrella insurance you may need, start with enough to cover your net worth. Another strategy is to add up the value of your assets, then take a look at the liability insurance you already have through your existing policies and buy enough umbrella insurance to make up the difference.

How Much Does Umbrella Insurance Cost?

An umbrella insurance policy with $1 million in coverage starts around $150 per year. A great value for the cost, but you may end up paying more in your other insurance policies to increase coverage to qualify for umbrella insurance. 

Most major insurers offer umbrella insurance but may require you to carry your other policies (auto, homeowners, condo, etc.) through them as well. Everything varies by company. 

Purchasing an umbrella insurance won’t always help ease the stress of legal proceedings, but it can help save your collection of things you’ve worked hard for. Contact your local insurance agent today to discuss available options for umbrella policies. If you are looking for a local agent in Pennsylvania, contact the team at Rumbaugh Insurance. Our agency is located in Hanover PA but services all surrounding areas including Northern Maryland.