colorful umbrellas
Do you need an umbrella insurance policy?

Can an Umbrella Policy Benefit You?

colorful umbrellas
Do you need an umbrella insurance policy?

Part of creating a smart total wealth picture includes living by the rule of “Insure What You Can’t Afford to Replace”. You’ve likely investigated or currently own insurance policies for your home, your car or your life.

However, have you investigated an umbrella policy and learned how one can potentially save you hundreds of thousands of dollars?

Umbrella policies can be a good idea because accidents can happen anytime, anywhere, even to the safest and most cautious of people, whether in the car or at home.

What is an Umbrella Insurance Policy?

Here’s the definition of an Umbrella policy according to Wikipedia:

Umbrella insurance refers to liability insurance that is in excess of specified other policies and also potentially primary insurance for losses not covered by the other policies.

In other words, an umbrella policy helps protect you and your family from major catastrophic events, claims and lawsuits. The umbrella policy provides insurance coverage over and above the typical homeowners or auto insurance policy.

What Types of Events Does an Umbrella Policy Cover?

An umbrella policy can cover any event from a major injury, damage to property or certain lawsuit situations. Here are some examples in which an umbrella policy could help you:

  • Injuries incurred when a visitor gets seriously hurt in your home due to a fall, animal bite or other situation on a property such as a falling tree branch
  • Injuries incurred to others when you are in an at-fault accident
  • Legal situations in which you are accused or convicted of slander
  • Injuries incurred by a tenant at a rental property you own

It’s important to note as well that most umbrella policies don’t cover intentional risk activities such as illegal activity (like driving while intoxicated) or intentional harm such as an angry response to a dispute with a neighbor that results in harm to a neighbor or their property.

Recommended Reading: Survival Tips for Everyday Life

How Much Does an Umbrella Policy Cost?

The cost of an umbrella insurance policy can vary greatly depending on the amount of coverage you wish to secure. A lower-end $1 million can be secured for around $200 a year, while a higher-end $10 million dollar policy can run closer to $1,000 a year.

It’s important to shop around when checking out umbrella policies from insurance companies in order to be sure you get the best deal available. And don’t just look at price – be sure to read the fine print on the details of the policy coverage each insurance company is offering you. Companies such as Citywide Insurance offer free quotes on umbrella policies and other forms of insurance.

Who Should Consider Carrying an Umbrella Policy?

An umbrella policy can benefit any number of people. Some more common types of people that tend to carry umbrella policies can include:

  • Those who have a good deal of income or investments that can be lost quickly via a lawsuit
  • Those who appear prominent; unethical opportunists sometimes look for ways to make money off of those who appear to have it
  • Those who own high-risk toys such as swimming pools, trampolines, ATVs and dirt bikes
  • Those who own rental properties

As you can see, an umbrella insurance policy can offer a host of benefits to the owner of it. In order to find out if an umbrella insurance policy may be right for you, talk today with a licensed insurance agent that specializes in umbrella policies.

16 comments

  1. Jaime says:

    I don’t have an umbrella policy right now but I intend to get one once I graduate college. There are just too many variables in life for me not to have an umbrella after university.

  2. At first as I was reading this, I was thinking, “How much insurance does the average person really need?” But some of the scenarios you pointed out are very realistic. The falling tree branch one actually almost happened in our backyard. Hmmmm…. Food for thought.

    • Laurie says:

      Yeah, you know, it’s amazing – we learned that this summer as you might remember. All worked out well, but if it hadn’t, we could have been out huge amounts of cash via a lawsuit.

  3. Josh says:

    This helped widen my scope of what umbrella insurance is. I believe my wife currently has a good insurance policy for her business, but this is something to consider in the future.

  4. I think umbrella policies are essential for the four reasons you listed at the end of the post. They do help add an additional layer of security to your assets. If you don’t have issues in those four areas it’s best to save your money. We got one a few years ago and it was worth it.

  5. Laura @ Piggy Bank Dreams says:

    You’re so smart, Laurie. I’m glad you’re around to educate the rest of us on this stuff. You had me at “in other words.” 🙂

    • Laurie says:

      Umbrellas are great for covering what normal policies wont’ cover. They’re kind of a catch all for a lot of unexpected situations which aren’t covered by a normal smorgasbord of policies.

  6. Despite owning rental properties and having some assets, we haven’t pulled the trigger on getting an umbrella policy yet. I feel like this might be a penny wise, pound foolish situation. What do you think, Laurie?

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