We are all faced with the question of whether we have enough insurance to cover ourselves in the event that something bad happens. Along these lines, the question comes up, “Do I need a personal umbrella liability policy?”
A Personal Umbrella Policy is designed to provide coverage in the event of a catastrophic claim, lawsuit, or judgment. Personal umbrella policies provide excess coverage over the insured’s basic primary policies such as the homeowners and personal auto. Umbrella policies pay only after the limits of the underlying primary policies are exhausted. Coverage is provided for bodily injury and property damage liability. Defense costs can also be covered, normally in addition to the liability limit, and sometimes included as a part of the total limit. A self insured retention must be met when certain losses are covered under the umbrella policy but not covered under the primary policy. The insurer requires the insured to carry certain minimum amounts of liability insurance on primary policies. Coverage under a personal umbrella policy can vary depending on the insurer since there is not a standard personal umbrella policy form.
Personal umbrella policies can provide a few additional benefits that a primary policy does not. More often than not, an umbrella policy will have a lower cost per dollar of coverage than a primary policy would. This means that it will cost you less to buy the additional coverage in the form of an umbrella policy than it would to pay for higher limits on the primary policy. In addition, the umbrella coverage would provide for broader coverage than just raising the limits of a specific coverage or type of coverage. Probably the most important additional benefit is that an umbrella policy will provide additional legal defense costs coverage. In today’s society, more and more people are using the legal system and the cost of defending these claims can add up quickly. A personal umbrella policy can increase this coverage and protect you in the event of a lawsuit.
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