Umbrella Insurance Requirements
Remember that an umbrella policy provides additional liability coverage for insurance policies you already have so there are a few requirements. The main requirement is the underlying liability limits on the policies the umbrella is intended to cover have to be at a certain minimum level. On your auto insurance policy, you must have a minimum of $300,000 liability coverage for injuries and a minimum of $100,000 coverage for property damage. On your homeowners, your liability limits must be a minimum of $300,000. For example, you cannot buy an umbrella policy if your auto insurance liability limits are 50/100/50, you would have to first up your limits before you can add an umbrella policy.
Umbrella Liability Insurance Coverage
Umbrella insurance is additional liability insurance coverage that helps protect you from major claims and lawsuits. Umbrella insurance helps protect your assets and your future in two ways:
- Umbrella insurance starts when the coverage on your homeowners, auto, boat insurance, or and any other personal policies go above your coverage limits and are exhausted.
- Umbrella insurance provides coverage for claims that may be excluded by other liability policies including false arrest, libel, slander, and liability coverage on rental units you own.
Why do you need an umbrella insurance policy?
Think of it this way, an umbrella policy reinsures, creates an umbrella over, your regular insurance policies and is there just in case a claim exceeds the limits of coverage you already have. It includes excess coverage for:
- Injuries to others
- Damage to others property
- Certain lawsuits such as libel, slander, defamation of character & invasion of property
- Personal liability situations
- Defense coverage for attorney fees and other legal costs
Examples of what an Umbrella Policy Would Cover
Bodily injury liability covers the cost of damages to another person’s body after your underlying policy limits have been exhausted. Examples include the cost of medical bills and/or liability claims due to injuries caused by:
- A serious auto accident where you’re at fault
- Harm caused to others by your dog*
- A guest in your home falls
- A neighbor’s child falls while playing in your yard
Property damage liability covers the cost of damage or loss to another person’s tangible property. Examples include the cost associated with damage to vehicles and other property due to an auto accident where you are at fault.
Owners of rental units help protect against liability that you may face as a landlord. Examples include the cost of liability claims due to:
- Someone tripping over a crack in the sidewalk of your rental property and suing you for damages
- Your tenant’s dog* biting someone and you being held responsible for the injuries
Coverage is also provided if you’re sued for:
- Slander: An injurious spoken statement
- Libel: An injurious written statement
- False arrest, detention, or imprisonment
- Malicious prosecution
- Shock/mental anguish
Need an actual example of how an umbrella insurance policy would provide coverage?
Let’s look at an example of how an umbrella policy would protect you in the event of a serious car accident that you were at fault.
- You cause a car accident, injure others, and the cost is $750,000.
- Your bodily injury limits on your auto insurance are $500,000.
- Your auto policy will cover $500,000 toward the cost.
- Who will cover the remaining $250,000?
- Your umbrella policy will cover the additional $250,000– up to the limit you choose for your umbrella policy.
- For only a few hundred dollars a year, isn’t it worth the peace of mind? Get a free umbrella insurance quote or call (888) 997-8683.