What Is a Personal Umbrella Insurance Policy?

Many of us purchase homeowners and auto insurance policies, perhaps a motorcycle policy and a boat policy. All these policies have liability coverage limits that protect us and our household residents if we injure someone or damage their property. But what happens when the limits of liability on those policies – your “primary” limits – are too low to pay for those damages? According to Forbes, 13 percent of liability awards exceed $1 million dollars.

An umbrella insurance policy is a comprehensive liability policy designed to protect you if your primary limits are insufficient. In that case, an umbrella policy responds. It helps protect you legally once the limit of liability coverage on your primary policy is exhausted. Umbrella policies typically provide protection up to the limits specified in the policy for these items:

  • Bodily injury claims filed against you or a member of your household
  • Property damage you or a family member may cause
  • Additional coverage for auto-related liabilities
  • Worldwide coverage subject to certain limitations

How Does the Umbrella Insurance Policy Work?

Your homeowners insurance, auto policy and other personal insurance policies like boat owners policies provide specific liability insurance limits. However, this coverage may not be enough if someone you injure sues you. Umbrella policies step in to pay claims that exceed the liability limits of your homeowners, auto and other personal insurance policies like watercraft and recreational vehicle policies.

Who Should Have an Umbrella Policy?

Individuals with assets to protect need an umbrella policy. These can include the equity in your house or other properties, cash in various accounts and your investment portfolio. But even if you have few assets today, one of the biggest exposures you face is the future earning potential of you and your spouse. If someone obtains an excess verdict against you and enters a judgment, your future earnings and any future assets you acquire could all be at risk. An umbrella policy provides an additional layer of liability protection that buys you and your family security and peace of mind.

How Much Coverage Do I Need?

Only a frank discussion with your Frontline Insurance agent can help you determine the limits of coverage you should choose. Here are a few questions your agent may ask.

What is the value of the assets you currently own?

Can you estimate the value of your future assets, including potential inheritances?

Do you have teenagers who are driving or perhaps an elderly parent on your policy?

Do you own multiple properties?

What recreational activities do you take part in?

Do you own a corporation, is your name in the news frequently or do you
have significant social visibility? If so, you may be a “high-target” defendant.
The umbrella policy is relatively inexpensive. Many insurance experts consider the umbrella policy the best consumer value in the insurance industry. You will only spend a little extra per month for extraordinary protection.
With jury verdicts increasing every year, an umbrella policy provides peace of mind for you and your family. Talk to your Frontline Insurance agent about the benefits of an umbrella policy. Our experienced agents can help you determine the coverage amount that works best for you. To locate a Frontline agent near you, please visit our website for a quote.

Please remember that the comments contained in this blog are general in nature and that coverage under any specific policy of insurance will depend upon the terms and conditions of such policy.