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Why You Need Umbrella Insurance


Why You Need Umbrella Insurance

Published Tuesday, July 11, 2017


“Since when do people insure umbrellas?”  Perhaps that thought ran through your mind the first time you heard the term, “umbrella insurance.”  Actually umbrella insurance may be one of the least understood policies consumers purchase.  Basically people purchase the coverage because their agent recommends it.  Trusting your agent is important, but it’s equally important to understand the insurance yourself. 

So where so we start with umbrella insurance?  Well, from the beginning!  A simple definition for umbrella insurance is as follows: Coverage for personal injury or property damage for which you are legally responsible.

For this policy to come into play, your claim has to meet one of these stipulations:

  1. The claim is NOT payable under any underlying insurance (e.g., home or auto) or
  2. The underlying insurance limits have been exhausted. 

It’s important to remember that umbrella insurance is a second layer of insurance above and beyond your home or auto liability (hence the term, “umbrella”).  As stated in the second stipulation, the underlying limits must be used before the umbrella kicks in.

Umbrella insurance is important because it fills gaps that your home or auto liability may leave through exclusions.  It also offers liability coverage beyond your underlying limits. There are other important benefits to the umbrella. The insurance company will:

  1. provide a legal defense
  2. investigate the claim or suit
  3. pay all court costs
  4. pay up to $100 per day of your lost earnings, incurred at the company’s request.

When might you use an umbrella?  Here are some examples:

  1. You are at fault in an auto accident where two passengers of the other vehicle were badly injured and their car was totaled. The medical and auto repair bills have exceeded your $500,000 liability limit.  Your umbrella would step in and pick up where the $500,000 left off.
  2. Someone injures himself on your property and sues you for damages beyond your $500,000 homeowners liability limit. Again, your umbrella policy would come into play.

From the above examples, you can see that lawsuits are a major reason to have an umbrella.  We all know that large settlements are not the exception these days!  An umbrella policy really protects all that you’ve worked hard to achieve­­­­­ - your home, cars, perhaps boat or cottage.  If you are found liable and a judgment is awarded against you, you could quickly lose all your possessions.  The attorney fees alone can wipe out some people’s savings!  An umbrella policy can prevent such devastation.

Umbrella policies are easy to purchase if you already insure your home and auto with us.  We can easily work up an individual quote for you to consider---call us!


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