Should I Get Umbrella Insurance? Is It A Must In The U.S.?

Nov 15, 2020 | Personal Insurance

You must get Umbrella Insurance if you are one of the people who are in need of it. You certainly don’t want to pay for something that you don’t need, right? Hence, buying insurance that will be beneficial for you is a must thing to do. Though it is not generally required in the U.S. to purchase it, still, anything that can safeguard you, and your assets are always a priority. 

In this article, we will provide a thorough explanation of why you should get an umbrella insurance policy and what it can and can not do for your insurance plan. 

KEY TAKEAWAYS

  • Umbrella insurance is an extra layer of protection for you and your assets that can cover what is beyond your property. It is a must-have if you want to secure not just you but your family members as well. It covers your spouse, children, and even your pets.
  • It is not required in the U.S. to carry umbrella insurance. However, it is a must if you think you need it based on your profile.
  • You can purchase umbrella insurance to your insurance provider the same as your homeowner’s insurance and your auto insurance, or can get it elsewhere if you like. 
  • Those who have an enormous amount of savings and assets must purchase umbrella insurance. Also, if you are worried about facing any lawsuits, you travel all the time and want to be protected, you should get this coverage too. 
  • There is no specific right amount of umbrella insurance for you to have. Each person has their own needs, savings, assets, and lifestyle, which are factors in determining the amount of umbrella insurance to have. And the different insurance company has its own terms and ways of calculating the amount for your policies. Hence, the best way to know exactly how much best fits your needs is to talk to your trusted insurance agent about the rates. 

What Is an Umbrella Insurance Policy

An umbrella insurance policy is an extended coverage to the limits of the insured’s homeowners, auto, and watercraft insurance. It provides extra security than standard insurance. It covers those who are at risk of being sued for damages to other people’s property as well as injuries caused to others in an accident. Moreover, it is a protection against invasion of privacy, libel, vandalism, and slander. Apparently, you must buy first a minimum amount of homeowners’ insurance or auto insurance before you can add an umbrella policy. 

Some small businesses also use an umbrella insurance policy to keep at bay any potential monetary damages from claims. 

Who needs umbrella insurance? 

Umbrella insurance can be beneficial to anyone due to the reason that accidents can happen to anyone at any given time. We can never be prepared for any kind of accident, but having this coverage can at least keep your savings safe in case of a claim. For example, You have a pool party at home and an accident happened. After the investigation, it is found that you are held liable for the incident that caused three people to get injured. You then must pay all the medical bills of the three and might face a lawsuit. After all the bills were calculated, you found out that your standard homeowners’ insurance limit was all used up. There is where umbrella insurance can help you cover the remaining cost up to your policy’s limit. 

In addition to that, Umbrella insurance also extends its coverage to your family members such as your spouse, children, and relatives who also live in your house and who do not have their own insurance. So let’s say, your son uses your car and accidentally hits someone. Your umbrella policy should cover that. Also when your daughter happens to post libelous comments online about some person or organization, your umbrella policy will cover it as well in case your daughter gets sued. 

Here are the other things that will make you need umbrella insurance: 

  • Who have significant savings and enormous assets 
  • Those who travel outside the country and are worried about liability claims while they are not around. 
  • People who own things that can cause injuries that may lead to lawsuits such as swimming pool, backyard playgrounds, trampolines, and other activity stuff that are dangerous to use without supervision. 
  • Some breeds of dogs that may not be covered. In this case, it is best to check it with your insurer to make sure your breed is covered 
  • Those who are engaged in activities that can be a reason for lawsuits such as: 

○ Volunteering 

○ Leasing your assets ( being a landlord ) 

○ Being a Vlogger or Blogger who posts reviews of different businesses and products 

○ Joining sports that can cause injuries to others like: hockey, surfing, basketball, and racing. 

What does Umbrella Insurance Cover? 

Although increasing the liability limits on your homeowners’ insurance is such a big help, having umbrella insurance added to your policy extends its coverage beyond your property line or premises. Its unique features can keep not just you, but also your family members in safety. Nowadays, any little and petty things you comment online can cause someone to sue you. An unintentional accident by you or your spouse can lead you to court. We can never tell what can happen. Even when you are away and not at home, you are still not invincible from any lawsuit. 

Umbrella policy has broad coverage that can protect you and your loved ones. Here is what umbrella insurance can cover: 

  • An umbrella policy covers the medical expenses of the people you injured as well as their funeral costs. For example, you accidentally hit a car and injured three people, the driver, and its two passengers. That should be covered by the umbrella policy. 
  • It also covers other property’s damages. Let us say, you are having a birthday party in your backyard and one of your guests accidentally threw a bottle at your neighbor’s window and broke it. Umbrella policy shall cover the costs for the damages since the incident happened within your property. 
  • Lawsuits due to slander, defamation, libel, and legal fees will be covered. 
  • Damages caused by your family members or dependents and pets are covered as well as long as they are found liable. So if ever that your pet bit your visitor, the medical bills will be covered by umbrella insurance. 
  • If you are a landlord, injured tenants and any damages will be covered by your umbrella policy as well. 
  • If you love to travel or traveling abroad is part of your job, umbrella insurance can give you an extra layer of protection. If in case you get involved in an incident during your travel, an umbrella policy can cover that. 
  • Occasional domestic workers may be covered. Those who work for less than 35 hours a week like, babysitters, house cleaner, and gardener. Though each insurance company may have different terms and scope, hence it is still best to ask your insurance provider to check this coverage. 

What Is Not Covered by Umbrella Insurance? 

Umbrella insurance can extend your coverage, however, just like any other policies there are certain things that it does not cover such as: 

  • Your own injuries 
  • Damage to your personal property is not covered. However, your standard homeowners’ insurance may cover it depending on the cause. 
  • Injuries and damages that are due to intentional motive by the insured or criminal deeds. For example, you committed a crime and was found guilty. 
  • Damages to other’s property and injuries you caused by using recreational vehicles like jet ski, motorcycle, ATV, and boat. 
  • People who work full-time on your property such as nannies, housekeepers, and drivers are not covered. You better ask your insurance agent about this so you can get the necessary coverage that they need. 
  • Umbrella insurance doesn’t cover as well any form of liability that has a connection with a written and oral contract. That being said, if you happen to face a lawsuit with that matter, your umbrella insurance was not able to provide you protection. 

How much does Umbrella Insurance cost? 

You may be surprised, but umbrella insurance is actually affordable even though its coverage is quite overwhelming. Most people think that since it covers a lot, it surely does cost much. On the contrary, it is not. It may be difficult to actually pinpoint exactly how much the right amount of umbrella insurance is since each person has different needs and insurance providers have their own way of calculating rates. However, typically umbrella insurance starts at $1 million in coverage and stops at $5 million. But other umbrella insurance offers up to $10 million for those who travel. 

Generally speaking, if you want to be sure that you will at least be covered; it is always wise to buy enough umbrella insurance to cover your net worth and your lifestyle. It includes your savings, assets, and hobbies. These factors can contribute to the amount of your umbrella insurance. For example, you have a great number of properties and savings, and you travel a lot. Given all the information above will let you know that these are subject to a higher amount of policy limit. 

An umbrella insurance policy’s premiums are less expensive if you purchased it from the same insurer of your homeowners’ insurance, auto insurance, and watercraft insurance. Most insurers provide discounts if you keep all of your insurances with them. But if you wish to get your umbrella insurance on a separate provider, it is still up to you. Though again, the amount of your umbrella insurance also depends on your insurance provider. Nevertheless, the average required insurance coverage for you to have an umbrella insurance policy is $250,000 – $300,000 for homeowners insurance, and $150,000 – $250,000 for auto insurance. 

But generally, the cost of umbrella insurance will be determined by: 

  • The amount of coverage that you purchased – Naturally, the more coverage you choose, the more you need to pay. But if you really need certain coverage, don’t hesitate to add it to your policy. We all want to save cash, that is for sure. However, if you knew that you must add coverage and you didn’t, you will surely go to regret it someday. 
  • Your insurance carrier’s provisions – Each insurance company has their own ways of calculating their premiums and coverage. That being the case, there is always a chance that different insurance companies will give you a different quotation. 
  • Your risk profile and your driving record – This is a great factor that can contribute to the amount of your umbrella insurance. Insurers have many ways to know your background history. For example, you want to add umbrella insurance to your standard homeowners’ insurance. Yet they found out that you have a record of filing claims every now and then. 

Even the smallest problem that can be fixed easily like a broken window. Some insured just fix that kind of small problem by themselves instead of filing a claim. Hence, if you are the type who files everything as long as they can find a chance, then your insurer might think twice or give you a different than average amount of policy. Another example is if you have a record of claims regarding the theft of your luxurious pieces of jewelry. In other words, any kind of risk to the insurance company can be a factor to a higher insurance rate. 

Now that you already know what umbrella insurance is and how it works. It is still up to you if you are going to add it to your policy. Do what you see fits. Remember, anything that you pay as long as you really need it is never a waste of money. It is always best to be ready whatever may happen in the future. 

Contact us! We will be happy to provide you all the necessary information that will be beneficial for your insurance policy. A qualified insurance agent from our team will be happy to help you further understand all the things you wish to know about your insurance plan. The best Homeowners Insurance Denver CO. can be found here together with our team to ensure your needs will be all taken care of. Give us a call now!