What Is Umbrella Insurance? Key Coverage Insights

What if there was a way to give your biggest investment even more protection? 

Homeowners typically protect their property with homeowners insurance. However, it is important to understand the limitations of this coverage, so that you can ensure your property has all the protection available. 

An umbrella insurance policy can offer additional protection, but most homeowners do not know what this is and why it is so important. Keep reading to discover everything you need to know about umbrella policies and what they can do for you. 

Defining Umbrella Insurance in Simple Terms 

What is umbrella insurance? The short answer is that it is an additional form of liability insurance coverage you can add to your current policy. Therefore, while it is referred to as an “umbrella policy,” it may be helpful to think of it as a way of extending your existing home coverage. 

All homeowner policies come with some form of liability coverage. In fact, one of the hidden costs of home ownership is being responsible for the injuries of others on your property. Liability comes in handy if someone gets injured at your home and holds you liable, as the existing coverage can help pay for their medical bills and, if needed, your court costs. 

Umbrella insurance takes that even further, by adding an additional layer of liability coverage on top of the standard amount you receive with your home insurance. 

The Crucial Role of Umbrella Insurance in Your Financial Safety Net 

One of the primary functions of different types of homeowners insurance is to serve as a “safety net” when you are planning your financial future. It is one thing to set money aside in a savings account to help with future expenditures and the occasional emergency. However, it is unreasonable for the average person to save up enough for major house repairs after a covered event or a burdensome lawsuit.  

No umbrella policy explanation would be complete without answering the obvious question: Why would someone need more liability coverage than they already have? The answer is that it increases the size of your financial safety net. If your existing liability limit falls short (for example, you are being sued for $50,000 more than your limit), you may be faced with a significant out-of-pocket expense. 

Fortunately, this type of plan can help cover the excess amount so that if the unexpected happens, your finances remain intact. 

Understanding the Scope of Umbrella Insurance 

It is one thing to have answers to classic questions like “What is an umbrella insurance policy?” However, knowing exactly how such a policy works in the real world is another thing. To help you decide whether you need your own umbrella policy and how to best take advantage of it, it is important to understand the full scope of this type of plan. 

Incidents Typically Covered by Umbrella Insurance 

One of the most common incidents covered by umbrella insurance involves damage caused by pets, including dog bites. Whether a dog bite happens in the home or somewhere else, like a local park, you are legally responsible for damage caused by your pet. All it takes is a significant bite, and a few medical bills to cause someone to sue you. An umbrella policy helps protect you in case the damage exceeds your existing coverage limits. 

Another common incident is someone injuring themselves while inside your home. In some cases, the injured party may hold you responsible because they believe something you did or did not do (such as failing to clean the stairs) may have led to the accident. Again, should the injured party decide to take you to court and have extensive medical bills, these additional policies can supplement your existing coverage as needed. 

Finally, someone could decide to sue you because their child injured themselves in your yard. It may not sound fair, but you can be held legally responsible if someone gets hurt, even if due to their own actions (for example, you may be sued if someone gets injured swimming in your pool if the gate was unlocked). As always, having as much protection as possible before things potentially go to court is essential. 

Speaking of pools, adding one is a classic example of a renovation that will require additional insurance. 

What Umbrella Insurance Covers That Standard Policies Do Not 

When it comes to your home policy, it is best to think of an umbrella policy as a supplement to your existing coverage. The new policy offers nothing that your standard home coverage already covers. Instead, it enhances a critical aspect of the policy, which is your liability coverage. By covering more than the existing limit, a new policy can offer protections above and beyond the original policy. This could make a big difference when you need it most. 

How Umbrella Insurance Complements Your Base Policies 

It is easy to see why these plans are beneficial. After all, every homeowner generally agrees that their house and finances should have more protection and not less. But how does this new policy complement existing coverage? In many cases, adding a modest umbrella policy is cheaper than increasing liability limits, giving you better protection at a better price. 

Assessing the Need for Umbrella Insurance 

Relatively speaking, the cost of adding this type of coverage to an existing policy is low. However, that does not mean that everyone should automatically go out and purchase a new supplemental policy for themselves. Instead, use the tips below to decide if you are someone who would directly benefit from this type of coverage. 

Identifying Who Benefits Most From an Umbrella Policy 

Not everyone needs this level of coverage, so how can you tell if this plan is right for you? For one thing, the added protection is great if you regularly bring guests into your home. Every new invite is a potential lawsuit waiting to happen, so if you frequently host gatherings, you may need the protection offered by an umbrella policy. 

If you are a dog owner, you should consider an umbrella policy. You never know how much damage your dog could cause and how likely someone else is to sue over the damage. Instead of taking a risk whenever you take your dog for a walk, give yourself peace of mind. 

Finally, if you are someone who drives extensively, you should consider purchasing this additional coverage. The umbrella also extends to automobile insurance, and if you end up being sued for causing damage on the road, you will be grateful for the added liability protection. 

Commercial Umbrella Insurance Explored 

What is commercial umbrella insurance? This is the same kind of policy described above, but it is intended for business owners. If you already have commercial coverage to help protect your business, you can increase your liability protection with this type of coverage. 

Commercial umbrella insurance is especially appropriate for companies with more in-person interaction with customers. For example, if your customers can come into your place of business, they run the risk of getting injured. Other businesses that will benefit from an umbrella liability policy are those with a large fleet of commercial vehicles and those engaged in hazardous industries, such as an oil refinery. 

Get a Quote on the Best Umbrella Insurance 

If you feel umbrella insurance could benefit you, reach out to an InsureOne agent to find out more. We offer the best service and affordable options, customized specifically for you. 

At InsureOne, we are known for top-tier customer service and professionalism. Give yourself peace of mind by getting a quote online. Of course, you can also pick up the phone and give us a quick call at 800-836-2240. We also welcome you to visit an InsureOne office near you.