Personal umbrella policies are usually one of the least understood forms of personal insurance protection and there are several common misconceptions on them, especially since the term “umbrella” can be interpreted a number of different ways. Let’s examine a few of these misconceptions in an effort to shed some light on what umbrella policies are and how they work.
Misconception #1: “I have an umbrella policy; doesn’t that cover my jewelry?”
Unfortunately it does not. For starters, personal umbrella policies are liability policies, meaning they don’t cover any type of physical property such as your home, your home’s contents, or your autos. This is probably the most common misunderstanding that we run into, especially when the topic of jewelry, fine arts, or other valuables comes up. Many people think that an umbrella will cover everything, especially when it comes to property.
Misconception #2: “This is just extra liability protection that goes over my auto policy, right?”
Yes, but in reality they provide a lot more than just this type of protection! Umbrellas will provide excess liability over auto policies along with homeowner personal liability, watercraft liability, and liability associated with owning rental properties.
Misconception #3: “I’m already paying a ton for auto insurance now that my 16 year-old is driving. Do I really need to consider paying for even more insurance?”
Absolutely. Some of the worst claims we have seen over the years involved youthful drivers and having the extra layer of protection ended up making a tremendous difference. We have also seen bad auto claims involving adult drivers where serious injuries and/or deaths were involved and umbrella policies kept our clients from having all of their assets drained as a result of the accidents.
Misconception #4: “Umbrella policies are expensive.”
Actually, they aren’t when you consider the amount of protection they provide. For example, a $1,000,000 umbrella policy for two adult drivers who own a home and two cars can be bought for under $170 a year. *
Similarly, a $1,000,000 umbrella policy providing excess liability over homeowner personal liability and auto liability for two adult drivers, two youthful drivers, and five cars can be purchased for under $360 a year. *
The real question is whether you can afford not to have an umbrella should you experience a bad claim. Umbrella policies are relatively inexpensive ways to protect yourself against large claims involving bodily injury and/or property damage to others. Limits start at $1,000,000 and can be bought in additional $1,000,000 increments up to $10,000,000 (or even more in some cases). Please contact your agent or account manager to learn more about umbrellas and how they can provide you with additional protection – and peace of mind!
* Umbrella prices can vary by insurance company and are subject to underwriting requirements.