Accidents occur every day, unfortunately. To protect our homes, cars and boats, we carry insurance policies to financially protect us in the event there is an accident, or someone is injured.
Insurance policies have limits, though so what happens when a major accident occurs where you are found to be liable? Medical and legal costs still have to be covered.
Umbrella policies help in these situations.
What is Umbrella Insurance?
Umbrella insurance, sometimes called excess liability insurance, provides the additional coverage you need when you need it the most. It is an important financial tool that protects your assets.
For example, if a visitor to your property has an accident and you are found to be negligent, you are responsible for their medical costs. If they decide to sue you, these costs can rise exponentially.
While your homeowner’s policy will cover the legal and medical costs, if it exceeds the policy limit, you are financially responsible for the balance.
Your policy may provide coverage up to $300,000 but if the expenses go up to $600,000, you are responsible for the additional funds.
An umbrella policy will cover the additional amount. It does not go into effect until your primary policy is maxed out.
What Can it Cover?
An umbrella policy comes into effect when your home or auto policies reach their limits.
It can also provide coverage in some unexpected cases. These include slander, libel and invasion of privacy.
The policy will also cover instances of wrongful entry and malicious prosecution.
Most other policies don’t provide this level of coverage.
The Umbrella Policy is usually extended over Uninsured Motorist Coverage only in states required by law to offer this coverage, and if it has been done by statue or judicial decision.
South Carolina law requires Uninsured Motorists Coverage but doesn’t require Underinsured Motorist Coverage.
What Does it Not Cover?
While umbrella insurance policies provide extensive coverage, it’s important to remember that it is a liability policy so there are some things that it won’t cover.
Here are a few examples:
- Any liability associated with an armed conflict or war.
- Any damage to personal property: as a liability policy, it covers damage where you are found to be liable or negligent. It can only help when you cause damage on another person’s property.
- Any damage that you or a family member did on purpose.
- Any liability your agreed to in a contract.
- Any liability related to business activities.
Are There Policy Limits?
Yes. It depends on the policy that you choose. Some policies pay out $1 million while others may go as high as $10 million.
To determine the level of coverage that you need, base it on your net worth. This will ensure that you are fully financially protected.
Umbrella insurance does not have to be expensive, but it is the extra coverage you may unfortunately need one day.
When considering adding umbrella insurance, talk with us so we can help you assess your risk level and decide on the right policy for you.