A Look at Possible Exclusions in an Umbrella Insurance Policy

Umbrella insurance is another form of liability coverage. It supplements the liability coverage on your home and auto insurance policies. While umbrella insurance is optional, you'll have a much higher coverage limit than you would on a traditional policy. Umbrella insurance is designed to protect you when you are held responsible for severe damages or injuries.

Common Coverage

Umbrella insurance helps protect your assets when you have to pay for medical bills, property damage, legal fees, and other expenses. Umbrella insurance protects you from having to cover some of the expenses out of pocket. This insurance takes over once you have reached your liability limits on your home or auto insurance policies. These policies generally provide millions of dollars worth of coverage. Another benefit is that umbrella insurance policies also have lower premiums compared to other insurance policies.

Possible Exclusions

Remember that umbrella insurance is only used as supplemental coverage. It is not a stand-alone policy. You may need to add a specific coverage limit to your home or auto insurance policy before you can add umbrella insurance. Generally, home insurance premiums are higher than umbrella premiums. Umbrella insurance doesn't protect you if you injure yourself or cause damage to your personal items. Umbrella insurance does not cover you if you choose to perform criminal acts such as intentionally injuring someone or damaging their property. You are not protected in unique situations such as causing property damage with an uncovered vehicle. Umbrella insurance policies do not cover you if your business is liable for hurting someone or causing damage.

If you believe that you have adequate liability coverage through your home and auto insurance policies to protect your assets, then you don't need umbrella insurance. However, if there is a chance that your assets could be at risk in the future, umbrella insurance is a huge asset. If you are involved in a profession that increases your liability, you should consider adding umbrella insurance. Common examples include coaching, volunteering, and serving on a non-profit Board. These are situations that leave you vulnerable to getting sued. Other situations where an umbrella policy is an asset are if you are a landlord, you perform public reviews, or you own high-risk accessories such as swimming pools and trampolines. Umbrella insurance can help you avoid going into debt.