Understanding Personal Umbrella Insurance

Insurance provides protection against risk. Insurance provides peace of mind if something bad happens. Insurance provides security to allow you to do certain things. Insurance is required for many endeavors. Regardless of if it’s personal insurance for your home, car, home, or other personal property, your insurance is there to provide coverage: to reimburse you in the event of damage, liability, or medical expenses. However, your insurance only provides coverage to a certain amount. If you want to increase this coverage, you either need to change your policy or purchase personal umbrella insurance.

What Is Umbrella Insurance?

Umbrella insurance is a stand-alone policy that is primarily used to augment the amount of coverage (compensation limits) of other policies. An example: let’s say your home is insured to provide compensation on the value of personal property up to the amount of $200,000. Some time later you increase the value of your home, or purchase items that dramatically increase your inventory’s value, so you take out an umbrella policy for $100,000. If a total of $260,000 of your property was damaged in a way covered under your Homeowner’s Insurance, that policy would cover the first $200,000, then your umbrella policy would pay out for the remaining $60,000.

Additional Coverage of Umbrella Insurance

However, umbrella policies aren’t only useful in enhancing the coverage of existing loans. They also are used to “fill the gaps” where you might not have coverage (or is excluded) from other insurance policies. In these situations instead of being a backup insurance, the policy becomes the primary coverage, paying out at the first dollar of loss or liability. For example, a standard homeowner’s policy normally doesn’t provide coverage for:

• False Arrest: held in custody without probably cause or order from a competent authority.
• Libel: written false statements that cause losses due to defamation.
• Slander: verbal false statements that cause losses due to defamation.
• Invasion of Privacy: losses due to invasion of privacy in non-public places.

An umbrella policy does provide coverage in these circumstances, covering liability and losses up to the amount of coverage it provides.

Necessity of Coverage and Amount

Due to the mostly secondary nature of umbrella insurance, it’s important to first figure out how necessary a policy would be for your current situation, and if so, how much you should take out. While every situation is different, the more other policies you have taken out, the greater coverage your umbrella policy will provide. Since it provides liability coverage for some gaps in your insurance, the amount you should get should be on par with your other liability coverages.

Want to learn more about personal umbrella insurance policies? Fill out our form for more information and a free online quote! Want to learn more about other coverages for your home or business? Contact the H&K Insurance Agency to talk to our insurance specialists about personal, commercial, and automotive insurances, as well as specialty insurances such as umbrella policies. We’ve been serving New England as an independent insurance agency since 1961, and we hope we can serve you too.