facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
How Does an Umbrella Insurance Policy Work? Thumbnail

How Does an Umbrella Insurance Policy Work?

What is Umbrella Insurance?

A Personal Liability Umbrella Policy (PLUP) extends liability coverage beyond what typical property insurance covers, such as home and auto. For example, if auto insurance covers personal injuries to other passengers in a car you hit when it’s your fault up to $250,000, a PLUP can kick in and cover you for the rest of your liability. Generally, the more your assets increase, the more they are at risk, and the more valuable a PLUP can be. Finally, this is a great example where having foresight now can save you a lot of money and hassle in the future. A PLUP can cost as little as $500 per year for $2M in coverage. 

What Exactly Does Umbrella Insurance Cover?

As a homeowner, you may have someone visiting your home. If they slip and fall, you could be held liable for their injuries and any other damages sustained. An umbrella policy is extra assurance that their bills will be taken care of without you suffering a huge hit. It helps avoid certain lawsuits and keeps your finances in order.

Even though your current homeowners policy should cover injuries and damages, there are instances where certain injuries are so extensive that they may not be covered, or at least not fully covered. This is an added benefit that will keep your investment safe. You may be wondering, what could possibly be covered by this type of policy. Here are a few examples:

Property Damage

With an umbrella policy, any damage or loss to someone else’s property will be covered. That could mean your kid playing baseball and accidentally shattering someone’s window, to damage to a vehicle where you are the party at fault.

Bodily Injury

For example, if you have a dog and they bite someone, you’ll be thanking yourself that you have an umbrella insurance policy. Additionally, if you have guests over and they slip and fall on your property, those injuries will be covered under this type of policy.

Personal Liabilities

This type of insurance also comes in handy under other personal liabilities. If you are ever sued for slander or libel, or someone accuses you of malicious prosecution, this policy will cover your expenses. Although this type of policy is often ignored, discussing the possibility of having an umbrella policy in place to protect your interests with an agent can give you more information and peace of mind.

Who Needs Umbrella Insurance?

Adding this additional coverage to your policy is important to consider if you are someone that has a lot going on, whether you entertain a lot, have a number of individuals over, have a business to run or have other situations that could put you in a position to compromise your investments. If you use your automobile a lot to transport things or are just on the road a lot, having an umbrella insurance policy to supplement your auto insurance policy could be just the thing you need. Or, if you transport a number of people from place to place, this would come in handy if you were to ever get in an accident and someone got hurt. If you are a parent that transports a lot of kids from place to place, this is a policy that should definitely be considered.

Understanding how an umbrella insurance policy can meet your needs will benefit you in the long run. It’s always better to be safe than sorry.

This content is developed from sources believed to be providing accurate information, and provided by MKAM and Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.