You never know where life will take you – as an individual, you can be liable in a variety of circumstances and be at risk of being sued. Personal umbrella insurance is a type of liability insurance. It can extend your personal liability coverage beyond the standard car and home insurance and watercraft coverage. Insurance providers will require you to have these types of insurance before considering your eligibility for personal umbrella insurance. This can be helpful if you are held liable for something and can’t afford to pay the amount – usually, this is relevant to any home or car liability. Your personal umbrella insurance may bridge the gap and ensure you aren’t paying out of pocket. Keep in mind that the specific coverage of a personal umbrella insurance policy will depend on the insurance provider.
Let’s take a closer look at what you need to know about personal umbrella insurance:
How Does Personal Umbrella Insurance Work?
Personal umbrella insurance is considered a secondary insurance policy. As mentioned, your car and home insurance will pay out its liability coverage before your personal umbrella insurance kicks in. The remaining expenses from your claim will use your personal umbrella insurance.
Who Should Invest in Personal Umbrella Insurance?
While personal umbrella insurance may not be required for everyone, it’s important to understand if you’re a good candidate for it. While most people may not face large liabilities, you may be more susceptible to claims based on your life circumstances. If this is the case, it can give you peace of mind for unexpected events. Here are just some scenarios where personal umbrella insurance may be appropriate for you:
- High-risk activities
- Travelling or road trips
- If you have any potential risks on your property
- Injury to others
What Doesn’t Personal Umbrella Insurance Cover?
Similar to other types of insurance, there are certain exclusions. Personal liability will provide coverage when your actions affect others. Also, this type of insurance won’t cover any liability related to your business. If you have any liability related to your business, then you can invest in a commercial general liability policy. Keep in mind that any liability related to contractual agreements won’t be covered under personal umbrella insurance either. If there are any claims related to communicable diseases, they may have the potential to be denied by your insurance provider under their personal umbrella insurance policy. Finally, any claims associated with criminal acts or acts of war will likely not be covered under personal umbrella insurance.
How Much Personal Umbrella Insurance Should You Purchase?
An insurance provider will help you to determine how much personal umbrella insurance to purchase. However, an appropriate amount of coverage typically matches your current net worth. This ensures you’re financially protected should you face liabilities. The more money you have, the more potential you can face larger losses. Consider re-evaluating your coverage in the future if your net worth changes to align your coverage amount with these changes.
The Cost of Personal Umbrella Insurance
If you have the potential for significant liability, then the cost of personal umbrella insurance can be well worth the investment. Overall, securing this type of insurance is generally affordable while adding substantial financial protection.
Hire an Insurance Broker
Securing the right personal umbrella insurance can be challenging, especially when there are many options in the market. If you’re having difficulty finding personal umbrella insurance and understanding all the factors affecting your rates, then hiring an insurance broker may be your best option. Contact Keller & Associates with any questions to help you get the full picture.