Umbrella Insurance: Increased Liability Protection and Peace of Mind

Umbrella, or "excess liability," insurance functions as a supplement, not a replacement, for standard homeowners, automobile, renters, corporate liability, etc. insurance, for what that standard insurance does not cover, or for when it maxes out. Individuals and companies purchase umbrella liability insurance to cover unforeseen and unlikely situations that would otherwise financially devastate them.

For instance, let's say a driver in your family gets involved in a serious accident where multiple people are injured, and your automobile insurance has a liability maximum of $300,000, but the resulting case leaves you owing $750,000. If you additionally have an umbrella liability policy, after putting in a claim with your automobile insurance for the full $300,000 available there, you would then put in a claim on your umbrella policy for the remaining $450,000.

Umbrella liability insurance is for unlikely and unpredictable catastrophes, to keep you from being financially wiped out all of a sudden. It is, thankfully, rarely used, and hence is fairly inexpensive. A policy with a liability limit of $1 million can cost as little as $20-$25 a month, though policies with substantially greater limits are available as well.

Umbrella liability insurance is often thought of as being for corporations and for the rich, and certainly the more you have in assets and income to protect, the more it's worth considering. But even people who are no more than middle class can be vulnerable to suffering losses much greater than their existing insurance will cover. A suburban homeowner with a swimming pool, for instance, runs the risk of being sued for all he's got if a neighborhood child is seriously injured in his pool.

There are many risks that people rarely think about that could potentially cause great liability, with certain factors increasing the risk. For instance, having drivers in your family who are young, accident-prone, or drive when intoxicated or fatigued certainly increases the chances of being sued for being at fault in an accident. Owning a pool as mentioned above, owning watercraft, having a lot of visitors in and out of your house, engaging in communication that some might take as slanderous or libelous, even owning a vicious dog, can all put you at greater risk and make umbrella liability insurance a more appealing option.

Umbrella liability insurance, like any insurance, is something you hope you never have to use, but that you have for your protection and peace of mind in the meantime.