Umbrella insurance what is covered

In an auto insurance policy, property damage coverage helps pay for the cost to repair or replace another car or object damaged in an accident you caused. In a homeowners insurance policy, your property damage coverage helps pay for the cost to repair or replace items, not owned by you, that you damaged. For a covered liability claim, your policy will pay a money judgment, up to your liability policy limits, to compensate the property's owner as well as a defense by counsel of the insurer's choice, even if the suit is groundless, false or fraudulent.

An umbrella policy typically provides personal injury liability, which is not always covered under auto or homeowners insurance policies. Personal injury can include damages resulting from:. The content on this page is intended for informational purposes only. It is not an insurance policy, and does not, in any way, replace or modify the definitions and information contained in individual insurance policies.

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Get your ID cards. Video Transcript Accidents happen in life - and sometimes, they can have financial consequences if you're held liable. When may a PUP come in handy? Here are a few examples: Suppose you're found at fault for a car accident that injures another person and their medical bills total more than your auto liability limits. Imagine you rent a boat on vacation and it's damaged in a wreck. Let's say you post a negative online review and you're sued for alleged defamation.

Find an agent. Your agent can answer questions about who your policy may and may not cover. You answered out of correct! Get a Quote Find an Agent. This content is for informational purposes only and may not be applicable to all situations. Coverage subject to terms, conditions, and availability. Policy issuance is subject to qualifications. Connect With Us. Update Below. ZIP Code.

City, State Set Your Location. You have entered an invalid ZIP. Please try again. Location data not available. Please enter zip code. Please Wait Updating Location And if you own rental property, umbrella insurance provides liability coverage beyond what your renter's policy covers.

Umbrella policies also cover malicious prosecution , wrongful entry, invasion of privacy, and other hazards. As you might have gleaned from these examples, umbrella insurance covers not just the policyholder, but also other members of their family or household. Many insurance companies say you need it because of the lawsuit-happy world we live in, where anyone can sue you for anything and ruin you financially. You can find plenty of personal liability horror stories in the news, where juries awarded multimillion-dollar judgments to the victims that individuals had to pay.

But how likely are you to find yourself in such a situation? Do you really need umbrella insurance? As a general rule, you might hear you should purchase umbrella insurance if the total value of your assets, including ordinary checking and savings accounts, retirement and college savings and investment accounts, and home equity is greater than the limits of your auto or homeowner's liability.

The real question you should ask yourself is, am I at risk of being sued? Everyone is, so in a sense, umbrella insurance makes sense for everyone. But some people are more likely to need an umbrella policy than others. Personal liability risk factors include owning property, renting it out, employing household staff, having a trampoline or hot tub, hosting large parties, and being a well-known public figure.

Having a teenage driver in the family also puts you at increased risk, as does owning a dog or owning a home with a swimming pool. Basically, the more likely you are to be sued, the more strongly you should consider purchasing umbrella insurance.

You throw a large holiday party, and one of your guests slips and falls on your icy front steps. She ends up with a concussion and some astronomical medical bills and decides to sue you. The money will have to come out of your retirement account, your main source of savings. The cost of an umbrella liability policy depends on how much coverage you purchase, the state where you live insurance rates vary by state and the risk that insuring you presents to the insurance company.

The more homes or cars you own, and the more household members your policy will cover, the more it will cost. But umbrella insurance is quite cheap compared to other types of insurance, especially considering how much coverage it provides.

Why is umbrella insurance so cheap? If increasing your coverage and purchasing an umbrella policy is too expensive for you, as an alternative, you may be able to purchase endorsements to your auto or homeowners insurance that increase your liability limits beyond the usual maximums. Another possible requirement for getting umbrella insurance is that you have your auto or homeowner's insurance with the same company that issues your umbrella policy.

Also, it might be easier to have all your policies with the same company for administrative reasons. Then again, switching insurers to have all your policies under one roof might mean higher premiums overall, if the new company's rates are higher. One great thing about umbrella policies is that they provide broad coverage. They cover any incident that the policy does not specifically exclude, unlike some insurance policies, which only cover specifically named incidents.

But no insurance policy covers everything. Even the most careful person with the best intentions can end up on the hook for a huge judgment from a personal liability lawsuit. Umbrella insurance can help you do that. Insurance Information Institute. Liability Insurance. How To Start A Business.