What is a personal umbrella policy and why do you need it?
As an independent insurance agency, our goal is to educate and inform our clients about the various insurance products available to protect their financial well-being. One such product, often overlooked, is the personal umbrella policy. Many people are unaware of what a personal umbrella policy is and the critical role it can play in safeguarding their assets. In this blog article, we will discuss the ins and outs of personal umbrella policies and explain why it may be essential for you to have one.
What is a Personal Umbrella Policy?
A personal umbrella policy (PUP) is an additional layer of liability insurance that goes above and beyond the coverage provided by your standard homeowners, auto, and watercraft insurance policies. This extra layer of protection kicks in when the liability limits of your underlying policies have been exhausted. PUPs typically offer coverage starting at $1 million, with higher limits available for those who need or desire more extensive protection.
Why Do You Need a Personal Umbrella Policy?
Protects your assets
The primary reason for considering a personal umbrella policy is to protect your hard-earned assets. If you are found legally responsible for causing injury or property damage, your standard insurance policies may not provide enough coverage to fully compensate the injured party. Without a PUP, your assets, such as your home, investments, and future earnings, may be at risk to cover the remaining liability.
Covers legal expenses
In addition to providing extra liability coverage, a personal umbrella policy also covers the cost of defending you in a lawsuit, even if the claims are groundless. Legal fees can quickly add up, so having this additional coverage can provide peace of mind during a stressful time.
Extends coverage for certain situations
A personal umbrella policy can also provide broader coverage than your underlying policies. For example, some PUPs may cover libel, slander, or invasion of privacy claims that may not be covered by your standard homeowners or auto insurance policies.
Provides worldwide coverage
Whether you’re traveling domestically or internationally, a personal umbrella policy provides liability coverage regardless of where the incident occurs. This added protection can be especially beneficial for those who frequently travel or own property in multiple countries.
Who Should Consider a Personal Umbrella Policy?
A common misconception is that only high-net-worth individuals need a personal umbrella policy. While it’s true that those with significant assets have more to lose, anyone can be sued for damages that exceed their underlying insurance policy limits. Therefore, it’s important for individuals from all walks of life to evaluate their risk and consider whether a PUP is right for them.
Factors that may increase your risk include:
- Owning a home or multiple properties
- Owning vehicles, watercraft, or recreational vehicles
- Having a swimming pool or trampoline on your property
- Owning a dog or other pets
- Frequently hosting guests or parties at your home
Is a Personal Umbrella Policy expensive?
The good news is that the extra layer of liability protection is typically much less expensive than the cost for your initial general liability coverage. While costs will vary based on unique factors about you and the risks you face, you will typically find this coverage is fairly inexpensive. If you’re interested in finding out how much it would cost for a PUP, please contact us for a quote today.
A personal umbrella policy can provide vital protection against the financial consequences of a large liability claim. While not everyone may need a PUP, it’s important to assess your risk and consider the benefits of this extra layer of insurance. As an independent insurance agency, we are here to help you evaluate your needs and find the best coverage to protect your assets and financial future.