Liability insurance helps to financially protect policy owners when they are responsible for property damage or someone else’s injuries. It typically comes standard with most property and vehicle insurance policies, such as homeowners insurance and auto insurance.
But what happens in the event that you are sued for damages above your primary liability limits? In such a scenario, you could stand to lose all your savings. That’s where umbrella insurance comes in.
What Is Umbrella Insurance?
Also known as personal liability insurance, umbrella insurance serves as a fail-safe for your assets and savings. If you are sued for damages above the liability limits of policies such as homeowners and car insurance, your umbrella policy helps pay for what you owe.
Effectively, it provides extra liability coverage beyond the limits of the above-mentioned policies. It covers injuries to others as well as damage to their possessions. It covers not only the policyholder but also other members of their household or family.
Generally, umbrella insurance is very affordable in comparison to other types of insurance. If you are interested in getting a quick quote for umbrella insurance here in Florida, don’t hesitate to contact Harris Insurance.
How Does Umbrella Insurance Work?
Let’s jump into an example of how umbrella insurance works in order to give you an understanding of it in practice. Imagine a scenario where you are driving a vehicle and run a red light at a junction, which results in you colliding with another vehicle side-on. The result of this collision is significant damage to the vehicle and injuries to several people.
In this scenario, let’s imagine the following damages: $25,000 for car repairs, $275,000 for treatment of injuries, and $200,000 in lost earnings for the driver of the other vehicle. In total, you find yourself on the hook for $500,000.
While you have car insurance, let’s imagine that it only includes $300,000 liability coverage. This means that the other $200,000 needs to come out of your pocket.
However, if you had umbrella insurance, your policy would pay the $200,000 (i.e. the difference between the amount covered by your primary insurance and what you still owe). In addition, it would also cover your legal fees in the lawsuit.
The above is just one example of umbrella insurance, but you can see how it comes to the rescue in instances where the amount you are sued for is in excess of your primary liability limits.
What Does and Doesn’t It Cover?
Here’s a quick breakdown of what is usually covered under umbrella insurance:
- Other people’s injury treatment and funeral costs
- Other’s people’s property damage
- Your legal defense costs
- Lawsuits involving libel, defamation of character, and slander
- Property damage and tenant’s injuries (if you are a landlord)
Now, let’s highlight what umbrella insurance usually doesn’t cover:
- Damage to your own personal belongings
- Your own injuries
- Criminal or intentional acts
- Property damage or injuries that your business is responsible for
Furthermore, umbrella insurance policies typically don’t cover liability that stems from a breach of contract that you have entered into. For example, if a construction company sues you for non-payment following a job.
Who Needs an Umbrella Insurance Policy?
Note that umbrella insurance is not compulsory; no law exists requiring a person to buy a policy. However, if you have a high chance of being sure or have a lot of assets, it is highly recommended.
For example, you may wish to purchase umbrella insurance if you own property, are a landlord, coach kids’ sports teams, often host parties on your property, own items that may lead to injury lawsuits (such as guns, pools, dogs, or trampolines), partake in sports where you may injure others (such as surfing, skiing, or hunting), or are a public figure.
How Much Umbrella Insurance Should You Buy?
Generally speaking, it’s a good idea to purchase enough liability insurance to cover your assets. When it comes to umbrella insurance, add up your savings, property, and investment accounts. Then, look at the liability insurance that you already have through existing policies and buy sufficient umbrella insurance to make up the difference.
If the case where you are likely to earn far more in the future than you currently are (for example, if you are currently a student), it may be a good idea to include potential income.
The cheapest policy available for umbrella insurance is typical $1 million in coverage, with million-dollar increments meaning that $2 million is the next-cheapest policy, followed by $3 million, etc. As noted above, umbrella insurance is affordable and you will be able to get good coverage with whatever policy you opt for.
How to Buy Umbrella Insurance?
The easiest way to buy umbrella insurance in Florida is with Harris Insurance. We have been protecting Florida residents since 1965 and work with our clients one-on-one to ensure their complete satisfaction.
We have the expertise to correctly structure and monitor an umbrella policy for your specific needs. We will ensure that you are properly protected at a very affordable cost.
Simply speak to one of our experts for an evaluation of your current coverage and a free quote to add an umbrella policy. Click here to request your quick quote. We look forward to speaking with you.
LEGAL DISCLAIMER
Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
