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How does umbrella liability insurance work?
Umbrella insurance follows your home and auto insurance policies. An umbrella policy provides extra liability coverage above and beyond your home and auto insurance and protects you financially if you cause injury or damage to someone else's property. This extra coverage, also known as an endorsement, it would pay the difference between what your primary insurance covers and what you still owe.
What does personal umbrella insurance cover?
Specific coverage details vary by carrier, so be sure to speak with your local independent agent for specific guidance. Depending on your policy, umbrella insurance can cover you and members of your household against claims or lawsuits for:
- 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- we have parenting guidance!
- Other liability claims your policies may not cover, such false imprisonment
- Excluded areas of coverage that require separate coverage, such a boats
Real-life risk scenarios covered by umbrella insurance
Auto Liability Claim Scenario
- Your teenage driver is ordered to pay $1.5 million to settle injury claims after he is found negligent in an accident that injured three people. Your car insurance pays up to your policy limit of $300,000, leaving a $1.2 million balance in medical expenses.
- You are driving home from work and approach a well-marked work zone on the highway. You pass four barricades but misjudge a fifth, hitting it and a VDOT worker, exiting his work truck. The worker is thrown 35 feet and sustains brain and spinal injuries and a fractured sternum, requiring a payout of $2.5 million in medical expenses and lost wages.
- You contract a business to install a fence and shed on your property. The contractor notices and large dead tree on your property and recommends you remove it before they do your project, but you do not. A large limb from the tree falls on a worker's head and neck, severely injuring him, requiring a payout of $1 million in lost business and medical expenses.
- You ask a friends to take care of your property while you're on vacation. Your friends bring their two year old visiting grandchild with them to your house . The child climbs and falls from a retaining wall onto a brick patio. He suffers a traumatic head injury and is permanently disabled, requiring compensation for assistance with daily living activities.
What umbrella insurance does not cover
Umbrella insurance doesn’t cover your own injuries or property damage. Make sure you have enough homeowner's insurance to protect your property and possessions.
Umbrella coverage also does not cover:
- deliberate damage that you or a covered member of your household (Neither does your home or car insurance.)
- liability incurred in business or professional activities
- liability you agreed to under a contract you signed
- liability from armed conflicts
Is umbrella insurance worth it?
Umbrella insurance is not required coverage. A licensed insurance expert can help you if umbrella insurance makes sense for you, how much you need, and where to find the right coverage.
Here's a general rule of thumb for seeking umbrella coverage:
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.
Know your risk
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 have someone clean your house, have a hot tub, regularly host large parties, or you are a well-known public figure. In the litigious world we live in, there are situations that arise from everyday situations can suddenly leave you vulnerable to a considerable judgment from a liability lawsuit. Umbrella insurance can provide valuable peace of mind.
Learn more about personal umbrella insurance
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THE NORTHERN NECK INSURANCE INTEGRITY PROMISE — We pledge to provide straight talk and good counsel from our NNINS Virginia insurance experts through our blog. While we hope you find this to be a helpful source of information, it does not replace the guidance of a licensed insurance professional, nor does it modify the terms of your Northern Neck Insurance policy in any way. All insurance products are governed by the terms in the applicable insurance policy.
