Alice Yao | Updated August 21st, 2020
A personal umbrella insurance policy is an extra layer of liability protection above and beyond your standard insurance policies. Just like its name, an umbrella policy encapsulates all of your assets under its protection for greater peace of mind.
With record-high home values in the Greater Seattle area, many homeowners are especially vulnerable to costly liability claims that go above standard liability coverage limits.
We will go over how you can protect your assets with an umbrella insurance in these topics:
- How does umbrella insurance work?
- Are there requirements before adding umbrella insurance?
- How much does umbrella insurance cost?
How does umbrella insurance work?
A personal umbrella insurance policy is designed to protect your financial assets in major claims that you were found responsible for. This optional policy extends your standard coverages such as homeowners, auto, landlord, and renters insurance.
For example, if you happened to be in a major at-fault auto accident and the other person's injuries exhausted the liability coverage on your auto insurance, your umbrella policy will set in and take care of the remaining balance up to its coverage limit.
Besides paying for the costs of injuries and damages to properties, your umbrella insurance will also help you with legal costs to fight potential lawsuits associated with an accident.
What does it cover?
Umbrella insurance will provide protection against the following types of claims:
- Bodily injury: medical expenses, lost wages, funeral expenses.
- Property damage: cost to repair or replace another person's damaged property, such as home, car, boat, etc.
- Personal injury: false arrest, libel, slander, etc., that may be excluded in your standard policies.
- Landlord liability: protects you from liability claims on your rental property.
Extends protection to family members
An umbrella policy not only protects your financial assets, but also extends its coverages to shield your immediate family living under the same household. This extended protection includes your spouse as well as your children who are still financially dependent on you.
In addition, your umbrella policy will also take care of any injuries or damages caused by your pet.
How much coverage does umbrella insurance provide?
Most umbrella policies start the coverage at $1,000,000 and generally goes up to $5,000,000. Some insurance companies may be able to offer even higher coverages.
Also note that umbrella insurance is a companion policy and must be insured together with either your auto insurance and your primary residence policy such as your home, condo or renters insurance.
Are there requirements before adding umbrella insurance?
In order to purchase an umbrella policy, you must meet certain coverage limit requirements on your standard insurance policies, such as auto, watercraft, and property policies.
To break it down further, in order to qualify for an umbrella policy, your insurance company may require you to carry a minimum auto liability coverage of:
- Bodily injury: $250,000 per person and $500,000 per accident
- Property damage: $100,000
For watercraft liability coverage such as for your boat or jet ski, the minimum requirement is usually set at $300,000.
Property policy such as homeowners, condo, or landlord if you have a rental home, the minimum coverage requirement is typically set at $300,000 as well.
How much does umbrella insurance cost?
An umbrella policy is quite affordable given the greater financial protection it affords to its policyholders. According to the Insurance Information Institute, most umbrella policies cost between $150 to $300 per year for coverage of $1,000,000.*
Every insurance company has its own guidelines for policies. We always recommend talking to your insurance agent to discuss your personal policies in detail. Working with an insurance agent is the best way to make sure you are properly covered.
*”What is an umbrella liability policy?” https://www.iii.org/article/what-umbrella-liability Retrieved 5-19-20.
By Alice Yao |