Personal Umbrella insurance is additional liability coverage that goes beyond the limits of your other policies. For example, a tree from your property falls on your neighbor's house, crushing the roof, doing significant damage to a load-bearing wall, and causing bodily injury to the people inside. The repairs and medical bills are $600,000, and your liability limit is $300,000. Where are you going to get the other half of the money?
Hopefully, you have an Umbrella policy that will cover you. Umbrella insurance covers a wide variety of things, not just your home or car. It can cover you if you accidentally run into a building with your vehicle, or light your neighbor's house on fire during a BBQ.
Who Needs It?
Umbrella insurance usually costs $200-$600 annually. That's a steal when you are talking about $1 million of coverage. When asking yourself if you need an Umbrella coverage, you should approach the question from two angles.
First, do you have a lot of assets to protect? Typically, the minimum for an Umbrella policy is $1 million. If you don't have that many assets, you might not need one. The bottom line is the gap between your personal liability limits on your auto and renters or homeowners' insurances and your net worth.
If that gap is only $5,000, you may decide you don't need an Umbrella policy. If that gap is in the $100,000 range, an Umbrella policy could be a good option for you. Another benefit of having an Umbrella endorsement is that it covers you in the case of an underinsured/uninsured driver where medical bills or loss of income go above the at-fault driver's coverage. Fifteen percent of California drivers have no insurance with many more only having the state minimum $15k.
Second, examine your lifestyle. How likely are you to face a lawsuit? If you don't do a lot of highway driving, participate in risky recreational activities or own rental properties, you may not need extra insurance. On the other hand, if you love taking all the neighborhood kids out on jet skis on the weekend, an Umbrella policy could save you if an accident happens.
It's not always fun to think about getting sued, but it's an important possibility to consider. We always say that the best insurance policy is proper risk management.
If you think Umbrella insurance is right for you, give us a call at 916.984.3000