Insurance prepares you to take on the world while reducing your financial vulnerability to risk. Many of your insurance policies probably contain primary liability insurance, which protects you against lawsuits if you are responsible for third-party injuries or property damages due to car collisions, accidents in your home, or other covered incidents. While your auto insurance and homeowners insurance go a long way in protecting you against loss, they do have limits. What happens if your liability damages and legal expenses exceed the value of your coverage? With umbrella insurance, you can relax knowing you are covered with supplemental protection when your primary liability coverage runs out.
What is Umbrella Insurance?
Umbrella insurance is extra liability beyond the coverage you already have through existing insurance policies. It acts as an extra safety net when your first one gives out. With it, you are likely covered for an additional million dollars or more in damages. Without it, your income and assets could be at risk of loss due to litigation.
In addition to property damage and bodily injury liability, umbrella insurance can also provide coverage for other situations, such as:
- Rental unit and landlord liability
- Accusations of libel, slander, or defamation
- False arrest or imprisonment
- Malicious prosecution
- Liability when traveling abroad
- And more
Some liabilities exist outside the umbrella. For example, your insurer is unlikely to cover you for intentional, willful, or criminal acts that result in third-party injuries or property damages. Talk to your agent for more information about umbrella insurance exclusions and to better understand the terms of your policy.
Examples of Umbrella Insurance Claims
For reference, imagine the following scenarios in which an umbrella policy could become beneficial:
Scenario 1: You invite guests to your home for a party during the holiday season. Unbeknownst to you, the front steps have iced over due to falling temperatures and drizzling precipitation. Upon arrival, a party-goer slips, breaking her arm, knocking out her teeth, and giving herself a head injury. She sues you for medical bills, dental bills, lost wages, and emotional damages. Your homeowner’s insurance limit only covers $250,000 of the court’s $750,000 judgment against you. The million-dollar umbrella policy you purchased takes care of the remaining damages, safeguarding your nest egg and financial assets against seizure and liquidation.
Scenario 2: Your teen driver causes a car accident on the freeway that results in a multi-car pileup and multiple severe injuries. The victims sue you – the parent – for property damages and medical bills, as well as additional damages for any fatalities. The total of judgments and settlements comes to $3 million. Although your auto insurance provides limited initial coverage, the large umbrella policy you purchased takes care of the remaining damages in full, preventing you from financial ruin.
Scenario 3: You agree to serve as a chaperone on a school field trip or church trip. A student is severely injured under your watch, and the parents sue you for damages. As a renter, your renter’s insurance covers a portion of your personal liability, but you rely on your umbrella policy to pick up the slack once your primary limits are exhausted.
Should You Purchase an Umbrella Policy?
Although wealthy individuals usually benefit from umbrella insurance, you do not have to be rich to utilize this important coverage. At Great Lakes Insurance, we typically recommend umbrella insurance to anyone who has current or future financial assets to protect. After all, a claimant can pursue compensation of damages not only from your existing income and assets but also your future income and financial stores.
You may need umbrella insurance if you have:
- A business
- Future income (after graduating college)
- Expected future inheritance
- Physical assets of value
- A nest egg
- Savings for a large purchase
- And more
You can do everything right your entire life, and just one mistake can undo all you’ve worked so hard to achieve. Don’t put your hard work and future at risk. Talk to an agent at Great Lakes Insurance to find out if umbrella insurance is right for you.
Minnesota Umbrella Insurance Quotes
Several factors can affect the cost of your coverage. Although umbrella insurance tends to be very affordable considering the high limits of coverage it provides, we here at Great Lakes Insurance still aim to save you money on your premiums. We shop and compare coverage from multiple insurers to find competitive rates on the coverage you need.
Umbrella policies typically start at $1 million of coverage – usually for no more than $150-300 per year. You may be able to add additional coverage in million-dollar increments at reduced proportional costs. Many insurers offer as much as $5 million or more in maximum liability coverage. We are happy to assist you in determining how much coverage may be right for you.
Note that your insurer may require a minimum amount of primary liability coverage before issuing your policy. For example, you may need to raise the limits on your car insurance or home insurance before qualifying for a supplemental insurance policy.
Can you put a price on your future financial security? You protect everything else that is important in your life; why not do the same for the livelihood you have worked hard to build. For more information about Minnesota umbrella insurance or to request your free quotes, contact our office today. We look forward to serving you soon.