What is personal umbrella insurance?

Personal umbrella insurance provides additional liability coverage beyond the limits of your primary home, auto, or other personal insurance policies to protect your assets.

Personal umbrella insurance is essentially a secondary layer of liability protection that kicks in when the limits of your existing insurance policies, such as your homeowner’s, automobile, or renters insurance, are exhausted. Imagine it as an additional safety net that can help protect your assets, like your savings, home, and future earnings, if you are ever sued for damages that exceed your primary coverage limits. This type of insurance is designed to protect you from major claims and lawsuits, potentially covering situations such as serious auto accidents or incidents occurring on your property, where liability costs could surpass standard insurance coverage. It often covers legal fees, medical expenses for injured parties, and damages such as those from libel or slander claims, which might not be covered by basic policies.

Consider this scenario: you're involved in a serious car accident that is deemed your fault. The total medical expenses and property damage amount to $750,000. However, your auto insurance policy only covers $300,000 in liability. Without personal umbrella insurance, you would be responsible for the remaining $450,000, which might mean selling your assets or dipping into your savings. If you had a personal umbrella policy, it could cover the excess amount, shielding your finances from this unexpected liability.

If you have significant assets or savings, or if your lifestyle includes activities that might increase your risk of liability (like owning a swimming pool or having teen drivers in the household), looking into personal umbrella insurance might be wise. It's generally affordable compared to the extensive protection it offers. Assess your current insurance policies and any potential risks you might face. Consulting with an insurance agent can help tailor a policy that meets your needs, ensuring you and your family are adequately protected against unforeseen liabilities.