An umbrella policy is a personal excess liability—or liability policy. They are one and the same. This policy covers events that happen on or off your property, such as accidents or injuries, and not necessarily those that cause damage or destruction. It is an overarching policy that protects you and your assets in the event other insurance coverages have hit their limit. Let’s take a look.
Unforeseeable Events
An umbrella policy can cover events that happen on your property that might not be covered by your homeowner’s insurance or other stand-alone insurance policy (such as for your valuables). But what events might these be? In short, any unforeseeable event. These could include:
- The girl scout who falls as she’s walking up your drive to deliver cookies
- The neighborhood kid who cuts through your yard and crashes his bike in the ditch
- Your fenced-in dog bites someone, even if “beware” signs are clearly posted.
Whatever the accident or injury, if it happens on your property, your insurance will be paying the bill. Umbrella policies stack with other insurance policies, such as your homeowner’s or car insurance, which is good news if you have a car accident and your auto insurance limits happen to run out. If costs exceed your auto coverage, an umbrella policy fills the gap. Most carriers require that they issue both your homeowner’s and umbrella policies.
Disclose Anything Disputable
Don’t fumble by forgetting to inform your agent or carrier of these common circumstances that might cause a claim to be denied.
There are certain scenarios that might prompt your carrier to deny a claim on your umbrella coverage. These things could be aggressive dog breeds, pools and trampolines, and even golf carts.
Aggressive dog breeds include rottweilers, pitbulls, German shepherds, chows, and more. While all dogs can bite, these breeds are specifically known for certain behaviors and thus could be denied should you file a claim that your rottweiler Snowflake bit the FedEx deliverer. Be sure to disclose the breed of your dog on your policy.
To avoid any denied claims regarding pools and trampolines, umbrella insurance policies often require that pools must be fenced in and trampolines need to be netted. These must be disclosed as well.
Even though golf carts are a mode of transportation, they are not covered by your car insurance policy. You will need an umbrella policy here. Why? Imagine a driver, operating their cart under normal circumstances, happens to crash the cart and injuring their passenger. In this scenario, the only way for the passenger to get coverage for their injury would be to sue the golf cart owner, and the owner’s umbrella policy would pay out the claim.
Level of Coverage
You’ll want your umbrella policy to cover the total value of your assets. These assets are things that could get taken in a legal action. If you didn’t have enough coverage, you could be forced to liquidate items to pay any judgment against you. These assets include:
- Bank accounts
- Home(s)
- Auto
- Boat (and other toys)
- Rental home(s)
- Financial investments
- Collections and valuables
Most coverages begin at $1 million. However, if you are a higher risk professional, such as a doctor or a lawyer, or you have considerably more assets to protect, you may need to purchase a policy upwards of $5 million to $15 million in order to be fully covered.
Your state licensed agent, who understands both your occupational and lifestyle risks, can advise on the best coverage level for you.
Our trust insurance advisor Tracy Stowel of Team TraBert considers umbrella policies a “must have” insurance coverage.
Required Auto Coverage Limits
Even if you have car insurance, most umbrella policies require you to carry at least $250k/$500k/$100k on your auto policy. Carriers perform driving record reviews of all drivers covered by your policy. Avoid a fumble, in order to avoid issues being rejected for increased coverage or being dropped by a carrier, you’ll want to make sure any younger drivers on this policy (under age 25) are safe drivers and do not have excessive traffic violations and/or accidents on their record.
At the end of the day having this policy is probably one of the best decisions you could make to cover all your bases.
At Organized Instincts, our seasoned team of daily money managers can help you determine how big of an umbrella to purchase and work with your insurance agent to assess the coverage limit you need. Schedule a free consultation today. By carrying an umbrella policy, you’ll be singing in the rain with peace of mind that you’re covered.