Umbrella insurance covers liability that exceeds what existing home and auto policies cover. Umbrella policies protect against lawsuit related expenses rather than covering personal property or damages claims.
What Costs Do Umbrella Policies Cover?
Umbrella policies cover costs related to: Liable, slander, false arrest, false imprisonment, wrongful eviction, privacy rights violations. Typically it covers all lawyer fees, court fees, damages from missing work, and importantly the amount of damages you are sued for.
What Types of Insurance Does Umbrella Cover?
Umbrella insurance typically covers liability related to existing:
- Auto insurance policies
- Home owners insurance policies
- Renters insurance policies
- Other properties you have insured including boat
How Umbrella Insurance Covers Excess Liability
Let’s say you have $500,000 of liability coverage on your home insurance policy and $1 million umbrella policy. Someone slips and falls in your house and you get hit with $1,000,000 lawsuit. The home coverage pays the first $500,000 and the umbrella pays the remainder up to it’s $1 million. This gives you a total of $1.5 million liability coverage on your house.
Umbrella policies will also cover things excluded by your other insurance in some cases, in these cases only your umbrella will pay.
What if I’m Liable for Less than My Other Policies Cover?
If the amount you would owe is covered by your primary insurance then your umbrella policy never kicks in and pays.
Does Umbrella Insurance Cover Professional Liability?
There are two types of umbrella policies commercial and personal. But in many cases a personal umbrella policy can actually cover professional liability. The difference between commercial and personal is in what it covers, commercial liability covers things like giving bad advice as a professional where personal umbrella policies don’t. Whether you would want a specific one or both depends upon your business and what you are protecting.
Does Umbrella Insurance Cover Property Damage?
Umbrella insurance typically covers liability from lawsuits and not property damage, however depending upon the claim and what happened there are instances where umbrella policies will cover property damage too. An umbrella policy won’t replace a flood policy for instance, but it will cover damages you cause if the flooding of your property damages another person’s property. As a rule of thumb umbrella policies don’t cover your personal property, but can cover costs related to the property of others.