Umbrella insurance

WHAT DOES UMBRELLA INSURANCE COVER
Umbrella insurance is meant to help protect you from large and potentially devastating liability claims or judgments. Personal umbrella coverage comes into play when your underlying liability limits (such as from a homeowners or auto insurance policy) have been reached.

What is Typically Covered by Umbrella Insurance? What is Typically Not Covered by Umbrella Insurance?
Bodily injury Personal belongings
Personal injury What’s Covered
Property damage Intentional or criminal acts or omissions
Landlord liability Written or oral contracts
PERSONAL UMBRELLA INSURANCE POLICY IN ACTION
To better understand how a personal umbrella policy works, here’s an example: If you’re at fault in a car accident that injures another driver, your regular automobile insurance may cover the other driver up to the limit you selected, say $250,000. But what happens if that limit is not enough to cover the other driver’s resulting medical bills?

If the other driver’s injuries are severe, you may be legally responsible for damages beyond the $250,000 your car insurance policy covers. And, if he sues you, your personal assets could be at stake. Imagine if that injured driver were a surgeon or another highly paid professional. What if the accident you caused resulted in an injury that kept him from doing his job for six months? Suddenly, he’s suing you for $1 million to cover the six months he’s away from work.

Your automobile policy’s liability coverage may pay for up to $250,000, but where would you come up with the remaining $750,000? A personal umbrella policy can help cover the additional costs when your standard insurance policy isn’t enough. An umbrella policy could provide the additional coverage you need so that you don’t get stuck trying to pay the remaining balance yourself. This extra policy could help protect your bank account, home and other personal property.

In most cases, personal umbrella policies are available in million-dollar increments, from $1 to $5 million. While an umbrella policy is not required, it may offer increased protection in the unfortunate event of an accident.

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YOU CAN COUNT ON A LOCAL AGENT.
An Allstate agent can answer coverage questions and help you find ways to protect what matters most.

WHAT IS GENERALLY NOT COVERED BY A PERSONAL UMBRELLA POLICY?
Your personal property.
While personal umbrella insurance is designed to help cover expenses if you are held responsible for damages to someone else’s property, that coverage typically won’t apply if you cause damage to your own property. Suppose your bathtub overflows, destroying drywall in your home. Your own damages would be excluded from coverage. But if the overflow destroys the property of your downstairs neighbor, your personal umbrella insurance may cover the damages caused by your negligence, preventing you from paying out of pocket for the loss. It’s important to note, though, that any umbrella insurance benefits would kick in only after the underlying policy limits have been exhausted.

Business losses.
Losses related to the operation of your business or damage to your business property would generally not be covered by a personal umbrella policy, says the American Institute of Certified Public Accountants. The exclusion applies even if the business is home-based. For example, if you earn money providing day care in your home, any liabilities that result from that arrangement would likely not be covered.

Click on button to view infographic.
Personal umbrella insurance typically doesn’t cover other business-related liabilities such as a malpractice lawsuit, or losses in connection with your paid position as an officer or member of a governing board of a for-profit organization.

Criminal or intentional actions.
A personal umbrella policy usually won’t protect you from the consequences of your own intentionally harmful or illegal behavior; for example, restitution you owe if you are convicted of a crime or damages you intended to cause through your actions.

Contracts.
Personal umbrella insurance typically won’t protect you from any liability that arises in connection with an oral or written contract you’ve entered. So if you find yourself facing a lawsuit from someone you’ve hired to work on your home, for example, it’s unlikely that your umbrella insurance would provide protection.

A local agent can answer questions about personal umbrella policies so you can decide whether having additional liability coverage makes sense for you.
What is ‘Umbrella Insurance Policy’
An umbrella insurance policy is extra liability insurance coverage that goes beyond the limits of the insured’s home, auto or watercraft insurance. It provides an additional layer of security to those who are at risk for being sued for damages to other people’s property or injuries caused to others in an accident. It also protects against libel, vandalism, slander and invasion of privacy. An umbrella insurance policy is very helpful when the insurance owner is sued and the dollar limit of the original policy has been exhausted. The added coverage provided by liability insurance is most useful to individuals who own a lot of assets or very expensive assets and are at significant risk for being sued.

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PERSONAL LINES INSURANCE
LIABILITY INSURANCE
INSURANCE COVERAGE AREA
ADDITIONAL INSURED
BREAKING DOWN ‘Umbrella Insurance Policy’
The premium for an umbrella insurance policy may be less expensive if the policy is purchased from the same insurer that provided the original auto, home or watercraft insurance. Depending on the provider, the policyholder who wants to add an umbrella insurance policy is required to have a base insurance coverage of $150,000 to $250,000 for auto insurance and $250,000 to $300,000 for homeowners insurance.

Umbrella insurance is often referred to as excess liability insurance. It acts as a fail-safe for your savings and other assets. If a policyholder is sued for damages that exceed the liability limits of car insurance, homeowners insurance or other coverage types, an umbrella policy helps pay what they owe. It may also provide coverage not included in a base insurance policy.

People who regularly purchase umbrella insurance will usually own property, have significant savings or they may own dangerous things that can cause injury (pools, trampolines, dogs, etc.). They might also engage in activities that increase their chances of lawsuits, such as:

Being a landlord.
Coaching kids’ sports.
Serving on the board of a nonprofit.
Volunteering.
Regularly posting reviews of products and businesses.
Participating in sports where you could easily injure others (skiing, surfing, hunting, etc.).
How Umbrella Insurance Works
To understand how umbrella insurance can help, consider the following scenario. If a driver runs a red light and accidentally hits another car, there might be significant damage to the vehicle and several people might be injured. With car repairs totaling $50,000 and the treatment of the injuries eclipsing $500,000, the driver at fault may be liable for expenses that go far beyond the coverage limits of their insurance. An umbrella insurance policy will pick up the additional liability costs beyond the limits of car insurance coverage.