Personal Umbrella: What & Why?

When securing a loan for a vehicle or property purchase, lenders require property insurance to safeguard against physical damage or loss. While the risk for property damage is limited to replacement or repair costs, it’s not your most significant financial vulnerability. The greatest potential for loss comes from liability exposure.

Liability exposure encompasses situations where you could be held responsible for causing harm, damage, or financial losses to others through your actions or negligence. Consider common scenarios like automobile accidents resulting in injuries to other parties, or premises liability where visitors suffer injuries on your property. Homeowner liability frequently involves accidents such as visitors or delivery personnel sustaining injuries from slipping on icy walkways, wet surfaces, or uneven ground, potentially leading to legal claims for medical expenses and compensation. Pet-related incidents, particularly dog bites, represent another substantial liability risk. Legal advertisements constantly remind us of potential lawsuits – but what’s the maximum amount someone could sue you for?

Consider these crucial questions:

• What’s the total equity value in your home?
• What’s the combined worth of your personal belongings?
• What’s your projected lifetime earning capacity?
• What’s the total value of your savings and retirement funds?
• What are your primary risk exposures?

Automobile insurance typically offers liability coverage up to $250K per individual and $500K per incident. Homeowner’s insurance can provide liability protection up to $500K, occasionally reaching $1M. But what if you need more comprehensive coverage?

A personal umbrella policy provides extended liability protection beyond standard home or auto insurance limits. Starting at $1M coverage, these policies can be increased in $1M increments, typically reaching $5M or $10M with basic underwriting requirements. Rather than providing first-dollar coverage, personal umbrella policies supplement existing liability coverage from home and auto policies. These policies can also extend protection to cover liability associated with boats, recreational vehicles, and other leisure activities.

Two primary factors determine the need for umbrella coverage: asset protection and exposures to risk. Asset protection is straightforward – if you have significant assets, protect them. Exposures to risk require more careful consideration. Do you maintain a swimming pool or hot tub? Are there inexperienced drivers in your household? Do you own investment properties? Do you have pets, particularly dogs? Is your annual mileage higher than average? The crucial question becomes: will your current coverage suffice if an incident occurs?

For individuals with assets exceeding $250,000 or significant exposures to risk, a personal umbrella policy provides essential additional protection and invaluable peace of mind. For a married couple with two cars and a home, a $1M Personal Umbrella policy is about $300/year. Policies are rated on the number of cars, homes, inexperienced drivers, and some companies will add cost per swimming pool.

Contact Atlantic Insurance today to learn more about Personal Umbrella coverage options and schedule a comprehensive review of your auto or home insurance. Remember Atlantic Insurance, “Where Having the Right Coverage, is No Accident!”