To protect your personal life, you will need several insurance policies. Many of these will offer liability coverage, which is designed to protect the policyholder and their assets if they ever make mistakes that harm others.
It is important always carry liability insurance on important assets like your home, car or business. If you ever cause someone else harm, you might have a legal responsibility to repay them. Liability coverage enables you to make this repayment without having to dig deep into your own pockets. That’s something that few people can afford, anyway.
However, even liability policies can only go far. Once your policy pays to its limits, it won’t cover any additional claim costs, even if someone expects a much higher amount of compensation. Therefore, you still face the risk of a financial burden. Still, there is a way that you can get additional liability insurance by buying an umbrella liability policy.
Umbrella liability insurance policies can provide high amounts of additional coverage where your standard liability coverage will not. Personal umbrella policies are designed to cover liabilities associated with your house, car or similar items. Commercial umbrella policies cover business liabilities.
In this blog, we will discuss how personal umbrella liability insurance works, and why it is a critical investment to make no matter what your net worth or where you are in your life. Our agency is committed to helping every client design the umbrella policy that is most optimized to them.
The Basics of Personal Umbrella Insurance
All insurance policies place terms on when and how much they will pay for a given claim. If you file a claim and any of your losses fall outside of the limits of your policy, then your plan won’t pay. As a result, you might have to pay for these outstanding losses on your own.
The limits of a liability policy might place a limit on how much compensation the plan will provide to a third party on your behalf. For example, if a car wreck is your fault, then another driver might file a claim against your auto liability insurance for their injury costs. However, if they demand compensation worth $750,000, and your auto policy’s liability coverage will only pay up to $250,000, then there is the potential for a $500,000 gap that you might have to pay on your own. That’s not something you want to even think about affording.
In a situation such as this, umbrella liability insurance might be a lifesaver. After a standard liability claim exceeds the limits of your basic policy, umbrella insurance can often step in to cover your remaining obligations. Therefore, you will be able to settle accounts with those to whom you owe money with a much lower personal monetary loss.
One of the most unique things about an umbrella policy is that you only need to buy one plan to extend higher liability limits to several different policies. Therefore, you can provide extended benefits for your car, home, RV, motorcycle, boat or other personal policies with only a single additional investment (which is often very affordable).
Consider just a few of the liability claims that your umbrella plan might be able to help you cover:
1. Bodily Injury Claims
If you cause a car wreck or a boating accident, then that accident might injure others. Or, someone might fall on a broken step in your home, sustain an injury and sue you for their losses. Because these accidents might be your fault, you might have to repay the affected person using your liability insurance. Umbrella insurance can help you have a resource even for the costliest challenges.
2. Third-Party Property Damage
Suppose that while trying to remove a tree on your property, the tree falls through a neighbor’s roof and into their master bedroom. Not only does the tree cause extensive structural damage to the house, but it also damages several pieces of antique furniture, electronics and jewelry on the dressing table. As a result, the neighbor sues you.
Though you certainly did not want the tree to fall the way it did, you might still have to compensate the neighbor. Should the settlement exceed your homeowners liability insurance limits, then your umbrella policy might be able to help you.
3. Personal Injuries
Someone might allege that you committed libel or slander against them. Though the harm you caused them might not be physical, it could still be damaging. When you speak or write something incorrect or malicious about someone else, their reputation could suffer and they could face significant personal harm. An umbrella liability policy will often cover these losses should someone sue you because they feel you were responsible for these losses.
4. Pet Bites
If you have a pet in your home, then that pet might bite someone and cause them significant harm. However, some standard home insurance policies do not cover these injuries. Still, a claim against your umbrella liability policy might be able to help, instead.
If you are interested in buying a personal umbrella liability policy, then you won’t regret the flexibility and essential protection that this policy can provide you. Our agents are happy to help you find the plan that is best for you in all cases.
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