A serious car accident or injury on your property could lead to expensive medical bills. And, if the unthinkable did happen, you could be held responsible for damages that exceed the limits of your homeowners, auto, watercraft and other policies. Umbrella insurance offers you an extra layer of liability coverage, designed to take effect if you ever need go beyond the liability limits of your existing insurance.
Primary Types of Coverage
Here are a few ways umbrella insurance can protect your assets.
- Bodily Injury Liability—Covers the cost of medical bills and/or liability claims that result from injuries to another person, such as a car accident where you are at fault, your dog bites someone or a guest in your home slips and falls
- Property Damage Liability—Covers the cost of damage or loss to another person’s property, such as vehicles damaged in an auto accident where you are at fault, your pet destroys a neighbor's expensive couch or your child accidentally damages school property
- Owners of Rental Units—Helps cover liability claims that landlords may encounter, such as someone falling down the stairs in a rental property and suing for damages, or a tenant’s pet injures someone and holds you responsible
Benefits of Umbrella Insurance
The major benefits of umbrella insurance may provide:
- $1 million or more of additional liability
- Coverage for defense costs and attorney fees
- Coverage for lawsuits not included in auto or homeowners insurance
Why You Might Need It
Several factors may increase your need for umbrella insurance.
- You serve on a nonprofit board of directors, increasing your exposure to lawsuits
- You have a long daily commute and driving in rush hour puts you at a higher risk of an accident
- Your home has a swimming pool
- You own a dog
- You often host guests, putting you at an increased risk of having a guest suffer an injury in your home
Situations Not Covered
Keep in mind that umbrella insurance won’t protect you in the following situations:
- Lawsuits resulting from a business you run
- High-risk activities in your vehicle, such as racing
- Crimes where you must pay restitution, such as driving while intoxicated
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