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What Does Umbrella Insurance Cover?


Umbrella insurance isn’t something most people have on their list of things to buy. While your homeowners insurance, auto insurance, and other insurance policies protect you against your liability for damage you may cause others, the truth is that in the event of a catastrophe, each of those policies – individually – might not be enough.

An umbrella policy is designed to help you to protect the assets you’ve worked so hard to gain. It does so by giving you coverage over and above your other liability policies.

What’s Covered?

In general, your umbrella coverage will give you coverage over the protection you already have. It will pay for injuries to other people or damage to their property. It may also give you added protection against certain types of lawsuits or situations – such as if you are a landlord and are sued if someone is hurt on a property a tenant is renting. Generally speaking, if your underlying policies cover it, the umbrella policy will cover it. Depending on the carrier you choose, you may also find the umbrella policy extends to situations not covered under your other policies, such as libel, slander, false arrest, mental anguish, and more.

Why Do I Need Umbrella Insurance?

Every single item you own – your car, your house, your bank account, and your income – is considered an asset. In the event you are sued and a large judgment is made against you, you’re going to have to find a way to pay the damages.

Let’s look at an example. Let’s say you’re driving down the highway one night. It was a long day and you’re tired, maybe even a little distracted. You nod off. The next thing you know, you’ve rear-ended a sedan with a family of 4 inside at 65+ miles per hour. A parent and child were killed; another child is in critical condition after being airlifted from the scene, and the driver is also fighting for his life. In the blink of an eye, you’ve taken two lives and dramatically altered two others.

No matter how you look at this situation, even the maximum level of liability you have on your automobile insurance policy isn’t going to begin to scratch the surface of the immediate and ongoing medical bills this family will incur. This is where the added security of an umbrella policy comes into play.

Before you can purchase an umbrella policy, you’ll need to make sure you area already paying for the maximum available limit of liability coverage offered on each of the policies you’re including – auto, home, motorcycle, and any others. Once your insurance agent has helped you make those changes, you can begin the application process and breathe a little easier knowing you’re protected against some of life’s worst-case scenarios.