Have You Considered an Umbrella Insurance Policy?
We all know that insurance is beneficial, and most of us own multiple types of insurance policies. We buy home insurance to protect against theft and property damage and auto insurance to cover costs due to a car accident. For the most part, a basic insurance policy will cover our expenses, but there are instances where they don’t. Where serious injury or damage occurs, you may be liable for costs that are much higher than what your policy provides. In these unpredictable circumstances, you may run into trouble.
What Is an Umbrella Insurance Policy?
Umbrella insurance is liability insurance that gives you extra protection for any damage you unintentionally cause to another individual or another person’s property. While your regular insurance coverage should cover the bulk of any liability claim, serious bodily injury resulting in very costly medical bills may increase costs that exceed the limits of a regular insurance policy.
How Does Umbrella Insurance Work?
An umbrella insurance policy extends your third-party liability coverage beyond the limits of your standard policy. If a lawsuit requires you to pay a larger sum than your regular insurance covers, your savings and personal assets may be at risk. An umbrella policy will potentially cover the costs above what your regular policy plan will pay.
Umbrella insurance is usually purchased as an additional policy separate from your regular insurance plan. While you may be able to purchase umbrella insurance from an alternate insurance provider, most insurance companies will offer umbrella coverage in addition to a standard policy.
Keeping your standard policy and umbrella policy under the same provider makes the administrative process easier in the event that you need to draw upon the umbrella policy for extended liability costs.
What Will Umbrella Insurance Usually Cover?
Personal umbrella coverage may also provide several additional benefits depending on your policy. Umbrella coverage may do the following:
- Cover the policyholder plus members of their household
- Provide protection from malicious prosecution and invasion of privacy
- Cover libel, slander, and false imprisonment
- Cover liability for property damage above what your regular policy covers
- Cover attorney fees related to lawsuits
What Is Not Covered by Umbrella Insurance?
While each policy is different, most umbrella policies will not cover the following:
- Damage to your own property, home, or vehicle
- Damage that you cause intentionally or criminally
- Damage that results from business or professional activities
- Liability that is assumed contractually
- Liability that is the result of armed conflicts
5 Reasons to Get an Umbrella Insurance Policy
While personal liability insurance is something that most people have in the form of homeowners or auto insurance, do you really need to go beyond that? Here are five reasons why umbrella liability insurance might be a good option for you.
1. Extra Liability Coverage
In a situation where you cause an accident that results in severe injury to another individual, you may be liable to pay thousands of dollars over and above what your regular insurance policy will pay. In this situation, any savings or personal assets you own, such as a home, will be at risk. You’ll be expected to pay any outstanding costs from your monthly income until you pay off those costs in full. This poses a significant threat to the lifestyle of you and your loved ones.
2. High-Risk Situations
There are several situations that could be considered high-risk and leave you open to higher liability.
- Having a pool or trampoline on your property – the risk of death or injury to guests is increased, which poses a high liability.
- Hosting large parties often – someone accidentally slipping on your property leaves you open to a lawsuit.
- Having household staff – individuals working in your home may be injured during the course of their work, posing a financial liability.
- Coaching kids’ sports teams – any lawsuits brought on by parents can be expensive.
- Participating in sports where you could injure other individuals, such as hunting, skiing, boxing, etc.
3. Coverage For Family Members
An umbrella insurance policy has the added benefit of covering other members of the household as well as the policy member. For example, if your teenager is found to be liable for a serious car accident, your umbrella policy will cover any additional liability costs which are not covered by their regular insurance policy. While coverage extends to household members, check your policy definitions to ensure you have all the coverage you need.
4. Provides Worldwide Liability Insurance
Enhanced liability may prove useful if you are involved in a car accident while travelling abroad. For example, in the United States, medical costs are much higher than in Canada, so your regular liability insurance may not be sufficient.
5. Provides Peace of Mind
No matter how careful we are, accidents happen, and the consequences may be grim. Umbrella insurance provides peace of mind so that the burden of personal liability is reduced.
Is an Umbrella Policy Expensive to Purchase?
When you consider that an expensive lawsuit might put your financial security at risk, an umbrella insurance policy is not an expensive option. Often, the cost will depend on how much coverage you purchase. Many umbrella insurance policies start with coverage of one million dollars.
Discuss the options with your insurance advisor, as the type of plan you choose will likely depend on the limits of your existing policy and your potential risk factor.
Where to Buy Umbrella Insurance in Alberta
Protect yourself financially from any unexpected surprises by contacting Cornerstone Insurance. We provide an array of insurance services, from home, auto, and life insurance for your personal needs to commercial insurance for your business needs.
Our insurance advisers will be happy to discuss your insurance requirements and will recommend the right level of insurance for your individual lifestyle. Contact us today for your free quote.