What are the best reasons to get an umbrella policy? We’ve identified seven types of people who should consider the extra protection an umbrella insurance policy can provide for their assets. The best umbrella insurance is a policy that will cover your assets when the liability coverage of your existing policies isn’t enough, but have you thought about whether you have the right coverage for your assets and risk?
Umbrella insurance policies are valuable because they can go above what is covered under your home, auto and boat insurance policies, helping to protect your money and property in case something happens. An umbrella policy would kick in after the limits on your normal liability coverage have been reached. You may be similar to one, all of them or none of them, but if you do have something in common with the folks listed below, you’ll want to call you insurance agent to learn more about umbrella insurance.
The Best Reasons to Consider Purchasing an Umbrella Insurance Policy
1. Consider umbrella insurance if… you have assets – like a home, car or savings – you want to protect.
You probably already have insurance for some of your assets, like your house or car, but don’t forget your other investments, as well as checking, savings and retirement accounts. Are they protected in the event of a liability suit? Your existing insurance policies, like your car insurance or home insurance, include liability coverage, but generally that coverage is limited. If you have further investments or wealth to protect, an umbrella policy can be a good idea. Remember, the more assets you have, the higher your policy limit should be.
2. Consider umbrella insurance if… you drive a lot.
The more you spend out on the road, the more time you spend at risk of an accident. Similarly, if you have a long commute or frequently drive during rush hour or peak traffic times, you’re also at a higher risk of getting into an accident. Unfortunately, accidents can make you more likely to get sued.
3. Consider umbrella insurance if… you’re the parent of a teen driver.
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 considering adding an umbrella policy is a good idea.
4. Consider umbrella insurance if… you own 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.
5. Consider umbrella insurance if… you have a dog.
While some insurers may refuse to cover “aggressive” breeds, such as pit bulls and rottweilers, or dogs that have a history of biting people, anyone with a dog could benefit from considering additional liability coverage. In the event of an incident involving your pet, whether it’s an injury or damages, you’ll want adequate liability protection. An umbrella policy can help supplement your existing insurance coverage.
If your pup is excluded from your homeowners policy, check with your insurance agent to see if umbrella policy will cover you and your dog. Not only could an umbrella policy increase your level of coverage, but it may also help cover things that aren’t included on your existing policies.
Read related: Dog Bites and Your Liability
6. Consider umbrella insurance if… you own a high-risk vehicle/toy.
Boats, ATVs and snowmobiles can be tons of fun, but they can also be very dangerous. As a toy owner, you should consider purchasing an umbrella policy in case somebody gets into an accident on your vehicle. However, be careful to review your coverage with an insurance agent, as some policies don’t cover accidents caused by certain vehicles.
7. Consider umbrella insurance if… you’re a small business owner.
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.
The Bottom Line
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?” If you have increased risk or valuable assets to protect, an umbrella insurance policy may be right for you. An insurance agent can help you understand if these best reasons to consider umbrella insurance apply to you and your situation.
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