What is an Umbrella Liability Policy and Why Should You Consider Having One?


‘We will pay damages in excess of the retained limit for………Bodily Injury or property damage an insured becomes legally liable due to an occurrence to which this policy applies and Personal Liability to which the policy applies.’  This coverage applies to damages in excess of the retained limit.”

What does this mean? An umbrella is called just that because it sits “over the top” of your other policies that provide liability protection—typically your personal auto and home policies. In other words, if your auto policy has $500,000 in liability coverage, a $1 million dollar umbrella would give a combined total of $1.5 million in liability coverage.

Let Us Paint a Few Pictures:

Most people think that only the wealthy need an umbrella policy. This is not true. Anyone who has assets to protect should have an umbrella.  Consider this: a child starts driving, and with their new license in hand, they hit the open road and are at fault in an accident where several people are seriously injured or killed.  The liability from will easily extend beyond the limits of the primary auto policy.  Another scenario: You are a youth soccer coach or a Scout leader and there is a suit brought against you because of discrimination and the award is higher than your  Homeowners policy liability limits.  Once those limits are exhausted, the liability isn’t just erased, the money has to come from somewhere. You could be forced into selling your home, car, boat or depleting the 401K or other assets in the future are normal.

Here are Five Reasons to Consider an Umbrella Policy:

  • We live in a litigious society and costs of insurance claims rise every year.
  • Your primary policy is simply not enough in many cases. Unfortunately, your primary auto, homeowners or boat may not be enough coverage if you get sued.  Most umbrella claims happen as a result of car or boat accidents or dog bites.
  • People need to protect their assets.
  • People need to protect their futures as court judgements can follow insureds for years to come. Courts can take future assets in addition to current assets.
  • Contrary to what you might assume, it is not that expensive. An average umbrella policy cost between $150 and $300 per year.

If you’ve never explored an umbrella policy to further protect yourself and your family from catastrophic financial loss, give us a call and we would be glad to discuss your options.