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Umbrella Insurance

What Is ‘Umbrella’ Insurance Coverage?

Umbrella insurance protects against devastating financial loss, should you be found at fault for a car, boat, or home accident. Think of it as asset protection. Umbrella coverage is extra liability insurance, which prevents having to dip into your savings, investments, retirement fund – even future earnings – if you are sued and must pay a legal judgment, medical expenses, and/or lost wages.


In other words, umbrella coverage is a low-cost method of adding significantly more liability insurance to an existing homeauto, or boat insurance policy. It provides peace of mind, knowing you won’t go broke if someone sues. Umbrella insurance may also be referred to as excess liability coverage or a personal umbrella policy (PUP).


What It Covers


One of the important things to know about umbrella insurance is it only kicks in once the liability limit of your home, auto, or boat insurance policy is exhausted. It covers you and members of your household who don’t have insurance themselves, such as dependent children – and it covers you no matter where in the world you may travel.


The most critical protection umbrella insurance offers is liability coverage for when you are sued and found responsible for accidental injury to others or damage to their belongings/property. This includes payment of your legal expenses.


Umbrella coverage may also protect against additional types of liability claims not covered by your underlying home/auto/boat policy, such as:


  • Wrongful eviction/entry
  • Invasion of privacy
  • Libel, slander, defamation of character
  • Mental anguish
  • Malicious prosecution


Check with the insurance professionals at The Windward Insurance Agency to find out what your umbrella coverage options are. 


hat It Doesn’t Cover


There are a number of exclusions in the average umbrella insurance policy. For example, the following are not covered by umbrella insurance:


  • Policyholder injuries or medical expenses.
  • Damage to policyholder’s home, car, boat, or personal belongings.
  • Intentional or criminal acts by.
  • Liabilities incurred during work or professional activities. This might even include babysitting if you’re getting paid for it.


Who Needs Umbrella Coverage?


Perhaps the better question is, what is your risk of being sued? In today’s litigious environment, everyone is at risk of being sued. And, once you are, it’s impossible to predict the outcome.


Considering the following risk factors for being sued can help determine whether umbrella coverage is something you should consider. These risks primarily involve owning or engaging in potential hazards.


  • Having considerable assets or significant savings
  • Owning a swimming pool, hot tub, or trampoline
  • Housing a dog, horse, or other large animals

Having kids living at home, including teen drivers

  • Driving a long commute or during rush hour
  • Being a landlord (owning rental property)
  • Employing household staff
  • Hosting parties or having guests over
  • Coaching a child’s sports team
  • Enjoying sports with a high risk of injury to others, including surfing, football, hunting
  • Volunteering, such as sitting on a nonprofit board
  • Being a well-known or public figure
  • Managing a family trust
  • Publishing product/service reviews online (increasing the risk of claims of slander, libel, etc.)


Scenarios Where Umbrella Insurance Saves the Day


Lawsuits may occur after the events laid out in each of the following examples. Whether the lawsuits end in settlement or a judgment by a court, if you are found liable, you are responsible for payment. However, with umbrella coverage, you won’t have to raid your own savings account to take care of it.


  • Your dog attacks a neighbor in the street, and they demand payment for their medical bills, lost wages, and pain and suffering.
  • You cause a multicar accident, and your auto insurance isn’t enough to repair or replace all vehicles involved.
  • At a party you’re hosting, a houseguest slips and falls, suffers a concussion and is hospitalized.
  • You rent a boat while on vacation and accidentally wreck it.
  • During a baseball game, your child throws a ball and accidentally breaks another child’s nose.
  • Your teen throws a party in your home while you’re away. A fight breaks out and several partygoers are injured. Their parents decide to sue.


In any of the above situations, if you are sued and found liable for $1 million in damages, this is likely $700,000 more than the average home/auto/boat liability insurance will cover. Instead of coming up with the $700,000 on your own, umbrella insurance takes care of it, after you pay the deductible.


It’s Affordable


Umbrella coverage is remarkably affordable, especially compared with other types of insurance. After all, it requires you to have an underlying home, auto, or boat policy with certain minimum liability coverage limits.


Umbrella insurance may range between $300 - $500 for $1 million in coverage, with each additional $1 million in coverage costing significantly less. You’ll want to be sure to get enough to cover your net worth, which is what you might lose in a lawsuit. You should also consider your potential future income, such as if you are expecting to inherit a large sum or are currently a medical student expecting to make much more in the future.


Bundling – buying your umbrella coverage with the same insurer providing your home/auto/boat policy – can often save you money. In addition, where you live, your credit history, driving record, and home insurance claims history can all impact how much you pay. And, of course, the more assets you have, the higher the cost of umbrella insurance.


Bundle Your Home, Car, Boat Insurance With Umbrella Coverage


Are you interested in umbrella coverage, aka excess liability insurance? We can help. The insurance professionals at The Windward Insurance Agency can provide you the best available options for umbrella coverage, as well as basic homeownersauto, and boat insurance. To get started, get a quote online now or call us at (866) 231-2433 for more information.