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Best Reasons To Get An Umbrella Policy


 | May 6, 2015

What are the best reasons to get an umbrella policy?  There are really seven types of people who need an extra umbrella insurance policy to protect their assets.

First, an umbrella policy is a type of personal liability insurance that gives you extra protection if a major claim or lawsuit is filed against you. You don't need to be rich to get one, or need one. You may be thinking, “I already have insurance on my home and car, so why should I have to worry about getting another policy?” Umbrella policies are important because they go above what is covered under your home, auto and boat insurance policies, helping to protect your money and property in case something happens.

These policies kick in after limits on your normal liability coverage have been reached. According to the Insurance Information Institute, you can buy a $1 million personal umbrella policy for $150 to $300 a year.

Here are seven types of people that most likely need an umbrella policy:

1.    Small business owners:  It’s no secret that business can be risky, and as the owner of a company, you should be prepared for the worst. The National Association of Insurance Commissioners recommends small business owners purchase a commercial umbrella liability policy to protect both their personal assets and the assets of their business in case they’re sued. This type of umbrella policy provides extra protection above a typical Commercial General Liability (CGL) policy, which covers bodily injury, damage to others’ property, personal injury (including libel and slander) and false or misleading advertising.
2.    Wealthy people: If you have substantial assets to protect (which includes your house, car, investments, as well as checking, savings and retirement accounts), an umbrella policy is a good idea. Remember, the more assets you have, the higher your policy limit should be.
3.    People who drive a lot: If you have a long commute or frequently drive during rush hour, you’re more at risk of getting into an accident and therefore more likely to get sued.  
4.    Parents of teen drivers: Immaturity often leads to risky driving habits, such as speeding and texting while driving. According to the Insurance Institute for Highway Safety, teens have crash rates three times those of drivers 20 and older per mile driven. Because you could be held responsible for paying back any damages your teen incurs that exceed what’s covered under your auto policy, protecting yourself with an additional umbrella policy is a good idea.
5.    Owners of recreational equipment: Swimming pools, trampolines and tree houses may be fun, but they also pose a huge liability risk. Some insurers may even exclude them from your policy, which means that if a guest gets hurt slipping on your pool deck, jumping on your trampoline or falling from your tree house, you’ll be responsible for paying all his or her medical bills—which can be steep.
If you don’t want to give up your backyard fun, the NAIC recommends purchasing an umbrella policy in addition to your home insurance policy to provide extra liability coverage.
6.    Owners of high-risk vehicles: Boats, ATVs and snowmobiles can be dangerous, and as an owner, you should consider purchasing an umbrella policy in case somebody gets into an accident on your vehicle. However, be careful, as some policies don’t cover accidents caused by certain vehicles.
7.    Dog owners: Some insurers may refuse to cover “aggressive” breeds, such as Pit Bulls and Rottweilers, as well as dogs that have a history of biting people.
If your pup is excluded from your homeowner’s policy, it’s a smart idea to protect your assets by purchasing an additional umbrella policy. You never know when Rover might decide to go after the mailman.

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