Your umbrella insurance offers additional coverage if you end up in a challenging situation

Key takeaways

  • You probably have basic liability coverage with your current insurance policy
  • That liability insurance could have limits on how much it will cover
  • Umbrella insurance provides additional coverage in case damages exceed your standard plan
  • Your policy provides peace of mind in any situation

You never want to end up underinsured. You rely on your home and auto insurance policies to cover damages and liability claims, but there are situations where your basic policy isn’t enough. 

New York is a no-fault state, so personal injury benefits up to $50,000 per person are covered no matter who causes an auto accident. But these benefits don’t cover property damage or personal injury damages above $50,000, which is why umbrella insurance is often necessary.

Umbrella insurance coverage offers additional protection on top of your existing home or auto policy. It’s a type of personal liability insurance that pays for claims that exceed a standard insurance policy’s limits. Here’s some information on how an umbrella insurance policy works and exactly what types of damages it can pay.

Bodily injury liability

Umbrella insurance offers coverage for injuries a third party suffers in an accident involving your vehicle or property. The policy pays for medical bills and liability claims against you in these situations. 

For example, if someone walks onto your property and is seriously hurt in a fall, you could find yourself on the receiving end of a lawsuit. In this case, your umbrella insurance policy would cover expenses that exceed your home insurance coverage’s limits. Your umbrella insurance policy also applies to car accidents where injuries exceed your auto policy’s limits.

Property damage liability

Your auto insurance policy includes coverage for property damage you cause while behind the wheel. But if you’re unfortunate enough to hit multiple vehicles in an accident or crash into a building, you could quickly exceed your policy’s limits. 

Umbrella insurance would apply in this situation by paying for any damages beyond what your auto insurance policy covers. These types of major accidents may be rare, but you’ll be glad you invested in the right insurance if you happen to end up in one.

Landlord liability

Landlords can sometimes find themselves in challenging situations due to the actions of their tenants. You already have home insurance covering some of the most obvious things that could go wrong while renting out a property, but that policy won’t cover everything.

For example, if your renters have friends over and someone trips on a loose tile and is severely injured, you could face a lawsuit because that tile is your responsibility – even if your tenant never told you about it. The same thing goes if your tenant’s dog bites someone or a tree branch falls from your yard and damages a neighboring home. You can be held liable.

Umbrella insurance coverage ensures you have protection in these situations. Peace of mind is incredibly valuable for landlords because you don’t want your investment property to become a financial liability.

Other lawsuits

You never know when you’ll face a lawsuit, so protecting yourself as much as possible is a good idea. Your umbrella insurance policy offers coverage against most lawsuits you may find yourself dealing with, including libel, slander, invasion of privacy, or defamation. 

This coverage also protects other members of your household in these scenarios. So, if you have children who are active online, investing in umbrella insurance could be invaluable if they make a mistake and you end up facing a lawsuit because of something they said on social media

What umbrella insurance doesn’t cover

Although umbrella insurance is a blanket policy that protects you in many situations, there are times when it won’t help you. Understanding where and when your umbrella policy won’t cover you is essential before you begin.

First and foremost, umbrella insurance doesn’t cover you when you’re guilty of a criminal act. It also doesn’t pay if you intentionally damage property or injure another person. 

Next, your policy won’t protect you from business losses. In the case of a lawsuit, your umbrella policy will cover personal losses but not damages awarded by judgments against your company. You’ll need business liability insurance for that.

Umbrella insurance also won’t cover you if you give someone else an infectious disease. For instance, if you knowingly pass an STI to someone and face a lawsuit, your umbrella policy won’t help. 

Who needs umbrella coverage?

Do you need umbrella coverage? It depends on several factors that could increase your chances of being sued.

Wealthy families should have umbrella insurance coverage because people often target them for lawsuits. The same goes for individuals who have a high public profile, serve on a charitable board, or manage a family trust. 

If you have a swimming pool, trampoline, or pond at your home, an umbrella insurance policy is a good idea because of the increased risk of injury these objects create. The same goes for households with large animals on the property because they can injure people quite easily. 

If you do a lot of entertaining or employ household staff, an umbrella policy might also be a good idea. The chances of guests being injured at a party or workers getting hurt on the job and deciding to sue are too great to leave yourself unprotected.

Understanding your risks and developing an insurance solution is essential because of the protection it provides for you and your family. Your decision will depend on your family’s needs and the assets you need to safeguard.

Finding a policy to meet your needs

Because your primary insurance covers most troubles, umbrella insurance is typically inexpensive. You’ll be glad you have it if the need arises, however, because the results of being underinsured can be catastrophic financially.

NICRIS Insurance offers New York State personal, life, and commercial insurance. We believe in providing each client with custom guidance to ensure they find the policies they need to protect their families. Contact NICRIS Insurance for more information or to get a quote.