What is Personal Umbrella Insurance? | Liability Coverage

By Nancy B
March 26, 2020

Umbrella insurance follows your home and auto insurance policies. In a nutshell, it's extra liability insurance that comes to the rescue if a claim exceeds your regular insurance coverage, with a few exceptions. Here's a story of how it could protect your assets. 

My friend, Liane, and her husband were going out to lunch. It was a beautiful spring day, not a cloud in the sky. Out of nowhere, a car came straight across their path attempting to make a left turn. The driver had not seen them coming. Fortunately, Liane's husband, Mike, and the other driver were not hurt. Liane was not so lucky.

Car Crash with Airbags


Liane had her feet up on the dashboard. The force of her airbag's deployment was catastrophic, causing severe lacerations to her ankles. Her year-long recovery included many months out of work, painful physical therapy, and the potential for permanent disability.

The driver was charged with failure to yield and was not sufficiently insured. The collision damage and medical claim went to court, and Liane and her husband won a liability lawsuit for negligence and 6-digit medical bills. 

Car insurance in Virginia can protect you when you're at fault like the driver that hit Liane and Mike. Your collision coverage pays to repair damage to your car or replace its value, and liability covers the cost of property damage and any injury if you're at fault, but only up to the limits you set on your policy.  In seconds, one accident like this can cost you $1 million + in damages and injuries. After your liability limits cover a portion of that,  Umbrella Insurance can step in. 


Car Crash with Emergency Responders


What Does Personal Umbrella Insurance Cover?

  • Slander, libel, and defamation: being sued for causing damage to someone's reputation
  • Injury to others or damage to their property by you and members of your household up to 1,000,000 with our basic policy
  • Legal representation and court costs
  • Liability protection for youthful drivers
  • Other liability claims your policies may not cover, such false imprisonment

Specific coverage details vary by carrier, so be sure to speak with your agent for more information.


Is Umbrella Insurance Worth it?

Here are a few more real-life risk scenarios:

  • You invite friends over to your home to celebrate the 4th of July. You provide food and refreshments, including alcohol. One friend drinks too much and causes a terrible car crash that kills one person. The family sues you for $2,500,000, and you’re found liable for serving the driver too much alcohol. 
  • Your teenage driver gets ordered to pay $1.5 million to settle injury claims after he is found negligent in an accident that killed two people and injured a third. Your car insurance pays up to your policy limit of $300,000, leaving a $1.2 million balance.
  • Your kid's friend drives an ATV unsupervised on your property and has a fatal crash. His parents sue you for $2 million. Your home insurance policy has a limit of $300,000 for liability.  Once the maximum limit of $300,000 was used to pay the claim, your umbrella policy would pay the remaining $1.7 million – protecting your assets. Without an umbrella policy, you would have had to pay this money out of pocket, even having to sell your home to do so.

Teen texting and driving


What Umbrella Insurance Doesn't Cover

  • Damage to your property. Make sure you have enough homeowner's insurance to protect your property and possessions.
  • Damage that you or a covered member of your household cause on purpose. (Neither does your home or car insurance.)
  • Liability incurred in business or professional activities.
  • The liability you agreed to under a contract you signed. (Read the fine print!)
  • Liability from armed conflicts.

Specific coverage details vary by carrier, so be sure to speak with your agent for more information.

Is a Personal Umbrella Policy Necessary?

The answer is simple: talk to your local agent. They're licensed experts who can help you determine how much umbrella insurance you need and find the right umbrella coverage for you. 



You might want to consider umbrella insurance if the total value of your assets is higher than the limits of your auto or home insurance liability. Those assets should include your cash accounts, retirement, college savings and investment accounts, and your home equity.



Your agent will also consider your risk. Maybe you engage in some activity that puts you at more risk of incurring excess liability. Personal liability risks come in many forms, such as having a teenage driver in the family and even owning a dog or a swimming pool. Perhaps you employ household staff, have a hot tub, regularly host large parties, or you are a well-known public figure. In the lawsuit-happy world we live in, situations that arise from some of these everyday situations can suddenly get you on the hook for a considerable judgment from a liability lawsuit. Umbrella insurance can protect you from that.


If you're wondering how my friend Liane is doing, she is very well! Her surgery was successful. She has total mobility in her foot and enjoys a full and active life. 


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