We live in a very sue-happy world. Every day we turn on the news or read the newspaper and some lawsuit is being filed for both serious reasons and frivolous. The latest protection that is being marketed as highly advisable is an umbrella policy.

An Umbrella policy gives you extra cushion for both your homeowners and car insurance policies. Most people have some sort of liability insurance, but usually the amount of coverage isn t quite enough to cover the claim. Having an umbrella policy will help protect your home, car and pretty much anything else someone may go after in a lawsuit.

Who needs an umbrella policy?
As with any policy or additional coverage, make sure to take into account what assets you want covered and how likely you are to get sued. Have your insurance agent help you evaluate this as it may be more cost-effective for you to raise your liability limits with your homeowners insurance or car insurance rather than purchase an additional umbrella policy. With raising your liability limits, keep in mind your premiums will go up.

Examples of individuals that should strongly consider getting an umbrella policy are people who own a swimming pool, trampoline, hot tub, swing set or even pets. All of these things should be evaluated and considered under your current liability limits. But again, people who own these items are at greater risk for a multi-million dollar lawsuit. All it would take is one guest getting injured in your pool and you could suddenly be thrust into a costly lawsuit.

What is protected with a personal liability umbrella policy?
Basically a personal liability umbrella policy is a broader insurance coverage with higher liability limits. Regular policies typically cover bodily injury and any property damage. With a personal liability umbrella policy, you can also include personal injury, property damage or bodily injury. These may be caused by you, your pets or any of your dependents. You may also be covered in the event of the following:

  • False arrest
  • False imprisonment
  • Defamation
  • Invasion of privacy
  • Malicious prosecution
  • Eviction
  • Wrongful entry

When umbrella policies go to work
Once the liability insurance in your homeowners or car insurance has run out, your umbrella policy will take effect. Essentially this isn t a separate policy; it s in addition to your current liability insurance with your homeowners and car insurance. That is why it s considered additional insurance. Depending on what amount you capped out at, your umbrella policy will cover all the expenses after your homeowners and car insurance liability insurance has been maxed. If for example your umbrella policy was for up to $1 million and you were sued for $2 million, you would need to come up with the additional million dollars.

There are always exclusions and loopholes when it comes to umbrella policies, so be sure to talk with your insurance agent so you can fully understand what your policy covers. Remember, coverages vary from state to state so make sure to review the policy extensively with your agent so you know what is covered. If you don t have an insurance agent, we have taken the hassle out of searching for one. Check out our matrix comparing nine of the top online Homeowner Insurance companies. The majority of the sites also offer free online quotes eliminating extra time and work.


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