These policies can be an economical way of handling possible liability claims against you personally due to various ownerships and activities. Generally, it is designed to protect you from large lawsuits brought against you by third parties. Therefore, it safeguards your assets and future. It works in two ways to achieve this objective.
1. It provides an additional layer on top of auto, home and boat insurance. This coverage kicks in when limits are exhausted on others.
2. It provides coverage for possible claims that may not be included in other policies. These are; libel, slander, false arrest and provisions for rental units.
What Does Personal Umbrella Insurance Cover?
This provision can be seen as an additional layer of protection that runs alongside other above-mentioned policies. As well as working as a backup plan, it also includes situations that are not the concern of a standard home or auto insurance coverage. Here are some of the solutions they offer;
Bodily Injury Liability compensates third parties’ sufferings sustained as a result of something you have done or happened somewhere you own. These include medical treatment costs and consequential losses. Some of the examples are:
· Third party injury claims as a result of an auto accident you caused.
· Injury sustained in your home by a guest or someone else’s child playing inside or in the garden.
· Harm caused to others by a dog or pet belonging to you.
Property Damage Liability works on the similar basis as others and pays for third party properties including homes, vehicles, bicycles and personal possessions. Here are some of the examples to these circumstances and costs;
· Damages caused to other people’s vehicles, homes and possessions as a result of a car accident you were at fault.
· Accidental damages to other people’s property by actions of family members or you. This could include ruining school properties by children. If you are responsible for them you are accountable for their actions.
· Damages caused to other people’s belongings and possessions by pets.
Rental Unit Owner Liability: This compensates claims you may face as the owner of a rental unit. Here are some of the examples;
· Claims people may bring against you for damages they suffered in the rental property. For example, they may be tripped by a lose patio stone in there and injure themselves.
· Your tenants or their pets may cause injuries and damages to others around and you may be sued for it.
Additional Coverage for Being Sued for:
· Libel – as a result of something you have written
· Slander – as a result of something you said
· False arrest, imprisonment or detention.
· Malicious prosecution
· Mental anguish caused
· And other personal defence cases
How Does It Work in Practice?
Perhaps an example will help in understanding how personal umbrella liability insurance works. Let’s say that you had an accident and found to be at fault. Third parties made large injuries claims of $600,000 as a result but your auto insurance liability limit is $500,000. Since it is exhausted you need to find $100,000 more to pay them.
Otherwise, they will probably start proceedings against you in a court, knowing you have assets and can pay for their losses. The personal umbrella policy you took will come to rescue and settle the shortfall of $100,000 in this case. In the same way, it provides an additional layer of protection on top of a home or boat insurance.
What Are Umbrella Coverage Limits and Costs?
It is an extra piece of mind you can buy at a reasonable cost, especially if the company is already providing you with the other policies. Premiums are expected to be around $200 – $400 per annum, depending on the properties and possessions owned. Usually limits start at $1 million and can go up to $10 million if you qualify. It may be a perfect solution for people who have a few exposures as discussed-above and aren’t confident that they are fully protected by existing policies.