What You Need to Know
What is Personal Umbrella Insurance?
Personal umbrella insurance provides an extra layer of liability protection beyond your existing auto, home, or other insurance policies.
It’s designed to help safeguard your assets and future earnings from major claims and lawsuits. If your standard policy’s liability limits are exhausted, umbrella insurance steps in to cover the remaining costs.
Umbrella insurance serves two key purposes:
- Excess Liability Coverage: Adds extra protection beyond your other insurance policies.
- Primary Coverage for Certain Losses: Covers some claims that may be excluded by your primary policies, such as libel, slander, or defamation.
How Does Excess Liability Coverage Work?
Excess liability coverage comes into play when a claim exceeds the limits of your underlying policies.
Excess liability coverage comes into play when a claim exceeds the limits of your underlying policies.
For example, if your auto policy covers $250,000 but you face a $500,000 lawsuit, your umbrella insurance covers the additional $250,000.
However, you must maintain your base policies (home, auto, etc.) with the required liability limits. If these underlying policies lapse, the umbrella coverage will only kick in after the minimum required limits are met, leaving you to cover the difference.
Primary Coverage for Excluded Losses
Umbrella insurance can also cover certain types of claims that aren’t included in standard policies.
Umbrella insurance can also cover certain types of claims that aren’t included in standard policies.
This might include personal injury claims like defamation, false arrest, or invasion of privacy. In these cases, you would pay a self-insured retention (SIR), which works like a deductible, before the umbrella coverage takes over. Retention limits typically range from $250 to $10,000.
Who Needs Umbrella Insurance?
Personal umbrella insurance isn’t just for high-net-worth individuals. If you have assets, a family, or increased risks such as owning rental property or frequently driving, an umbrella policy can offer significant protection.
- Homeowners: Protect against large liability claims from injuries on your property.
- Car Owners: Especially helpful for families with teen drivers who may be more prone to accidents.
- Landlords: Rental property owners can safeguard against tenant-related lawsuits.
- Boat Owners: Boating accidents can lead to large liability claims.
- High Net Worth Individuals: Protect significant assets and future earnings from lawsuits.
Benefits of Personal Umbrella Insurance
1. Extra Liability Protection
Umbrella insurance provides coverage beyond the limits of your existing home, auto, and other insurance policies. This can be crucial in the event of large claims or judgments that could otherwise exhaust your primary policy.
2. Broader Coverage
Umbrella policies often cover claims that standard policies do not, such as libel, slander, defamation, and personal injury claims.
3. Affordable Premiums
Compared to the amount of coverage provided, umbrella insurance is surprisingly affordable, often costing just a few hundred dollars annually for $1 million in protection.
4. Worldwide Coverage
Many umbrella policies offer liability protection globally, not just within the United States.
5. Defense Costs Included
In major lawsuits, legal defense costs can be substantial. Most umbrella policies cover these defense costs in addition to the policy limits.
6. Protect Your Future
An umbrella policy can protect both your current assets and future income from being seized to satisfy a large liability judgment.
7. Customizable Limits
While coverage typically starts at $1 million, you can often choose limits up to $5 million or more to suit your specific needs.
Key Features of Umbrella Insurance
| Feature | Description |
| Excess Liability | Provides additional liability protection above the limits of your existing policies. |
| Primary Coverage | Covers certain claims excluded by standard policies (e.g., defamation, libel). |
| Worldwide Coverage | Protects you globally, not just in the U.S. |
| Legal Defense Costs | Covers legal fees in addition to your liability limits. |
| Coverage for Household Members | Protects your spouse, children, and other relatives living in your household. |
| Rental Property Protection | Extends coverage to rental properties, protecting against tenant-related liability claims. |
| Self-Insured Retention (SIR) | Acts like a deductible for certain claims not covered by your primary policies. |
What Umbrella Insurance Does NOT Cover
While umbrella insurance provides comprehensive liability protection, there are certain exclusions to be aware of:
- Intentional or criminal acts: If you intentionally cause harm or commit a crime, umbrella insurance won’t cover the claim.
- Damage to your own property: Umbrella insurance covers liability claims, not damage to your own belongings.
- Business-related liabilities: Personal umbrella insurance doesn’t cover professional or business pursuits.
- Workers’ compensation claims: Coverage for workers’ compensation must be obtained through a separate policy.
- Contracts or agreements: Liability resulting from a breach of contract is not covered.
- Vehicles or watercraft not listed on the policy: Only covered vehicles and boats will be protected under the umbrella.
How Does Umbrella Insurance Compare to Excess Liability Insurance?
While both umbrella insurance and excess liability provide additional liability protection, there are key differences:
- Broader Coverage: Umbrella insurance often includes additional protections for personal injury claims, such as libel or slander, while excess liability simply extends the limits of your existing policies.
- Multiple Policies: Umbrella insurance can apply to several underlying policies (e.g., home, auto), while excess liability usually applies to one specific policy.
- Self-Insured Retention (SIR): Umbrella policies may have an SIR for certain claims not covered by your primary insurance, while excess liability policies typically do not.
Is Umbrella Insurance Right for You?
You should consider an umbrella policy if:
- You have significant assets to protect.
- You own a home, car, boat, or rental property.
- You want extra protection beyond your existing policies.
- You’re concerned about future income being garnished due to a lawsuit.
In today’s litigious world, personal umbrella insurance provides peace of mind, protecting you from large, unexpected liability claims that could threaten your financial stability.
FAQs About Personal Umbrella Insurance
Q: How much umbrella insurance do I need?
A: Most people choose coverage starting at $1 million, but your exact needs depend on the value of your assets and the level of risk you face.
Q: Does umbrella insurance cover rental properties?
A: Yes, umbrella insurance can extend to rental properties, providing extra liability protection for landlords.
Q: Is umbrella insurance expensive?
A: No, it’s relatively affordable. Most policies cost just a few hundred dollars a year for $1 million in coverage.
Q: Does umbrella insurance cover my family members?
A: Yes, umbrella insurance usually extends coverage to your spouse, children, and other household members.
Q: What’s the difference between umbrella insurance and excess liability insurance?
A: Umbrella insurance provides broader coverage and can apply to multiple policies, while excess liability simply extends the limits of a specific policy.
Get a Personal Umbrella Policy in Miles City, Montana
At Armor Insurance Agency, we understand that life can be unpredictable. Our umbrella insurance policies offer affordable, comprehensive coverage that protects you when the unexpected happens. Whether you need to increase your liability limits or close gaps in your current coverage, we’re here to help.
Contact us today for a personalized quote and safeguard your future with personal umbrella insurance.