| Most of our insurance agency clients, whom I ask | | | | around $15 a year per rental unit. The title to the |
| if they know what umbrella insurance is meant | | | | rented property should be on your name, not a |
| for, cannot answer positively. Yes, they have | | | | business entity name. The personal injury |
| heard about it, but they cannot say what it is for, | | | | protection under umbrella insurance policy offers |
| why people need one, and who should consider | | | | coverage not sometimes found in your auto and |
| buying one. So, let's start with the square one. | | | | homeowner's policy. It includes defamation, |
| Liability coverage is needed when a policy holder is | | | | invasion of privacy, false arrest, false |
| being sued in a civil court (not criminal). The | | | | imprisonment, malicious prosecution, wrongful |
| lawsuit against a person might come as a result | | | | entry, or eviction. Many primary policies cover |
| of a bad driving (the most frequent case) or | | | | bodily injury and property damage, but not |
| from whatever else one can be liable for. | | | | personal injury. |
| The driving liability protection comes from a car | | | | One of the best things about Personal Umbrella |
| insurance policy. The rest is covered under | | | | Insurance is that you get lots of coverage for the |
| homeowner's liability policy (condo or renter's | | | | money. Coverage start at $1 million, but you can |
| policy will do the job too) - dog biting, insulting | | | | go as high as $10 (sometimes even 50) million. |
| strangers, and many other things, which have not | | | | The total annual premium for a $1 million umbrella |
| much to do with one's residence. As usual, in the | | | | is very affordable and could be as low as $200 a |
| world of insurance exclusions apply. So, let your | | | | year. The premium depends on many factors |
| insurance agent take care of gaps and exclusions. | | | | including number of cars in household, how many |
| The maximum liability you can get on your car | | | | young drivers are there, previous claims. Many |
| insurance policy is $500,000. The same goes with | | | | companies will not sell umbrella insurance to |
| homeowner's insurance. Some companies would | | | | someone who does not meet the definition of a |
| go up to $1,000,000, which does not make much | | | | good driver. |
| difference if one's total assets exceed that | | | | Umbrella liability insurance can be purchased as a |
| number. If the real ugly thing happens and you | | | | stand alone policy. However, insurance companies |
| are liable for more than you are covered for then | | | | require that you buy an underlying basic liability |
| guess what? | | | | coverage first (homeowners/renters insurance, |
| Now you have to pay the difference out of | | | | car insurance, or both) before you can purchase |
| pocket. Why? Because you do not have that | | | | an umbrella liability policy. If you do not meet this |
| extra liability provided by that really inexpensive | | | | requirement, you will be personally liable for the |
| umbrella insurance policy, which adds one, two, | | | | difference between the liability limit you should |
| three or more million liability on the top of what | | | | have carried and the limit you do carry. Many |
| you have on your car or home insurance. | | | | insurers will not offer an umbrella policy to |
| Most of the people would say "I do not have that | | | | someone whose car is insured somewhere else. |
| much in assets". If that is the case then you do | | | | It is important to distinguish between actual |
| not need the umbrella insurance policy. While | | | | umbrella policy and excess liability policy, which |
| calculating the value of your assets do not forget | | | | many mistakenly call an umbrella. The difference is |
| to include 25% of the household income for the | | | | very clear - excess liability policy does not cover |
| next 10 years (garnishment of wages) on the top | | | | anything, which is not covered by underlying |
| of bank accounts and equity in your real estate. | | | | policy, while umbrella offers a broader coverage. |
| When you buy a personal liability umbrella | | | | Normally, the umbrella won't cover claims arising |
| insurance policy, you are getting not just higher | | | | out of a business endeavor. If you own a |
| liability coverage limits. You are buying a broader | | | | business, even a small one, you'll need to buy a |
| coverage as well. Your liability coverage pays for | | | | business insurance policy to be covered against |
| lawyer's fees and defense costs, which normally | | | | liability claims. If the court assesses punitive |
| add up quickly. | | | | damages against you, those damages will not be |
| By the way, if you have rental property (up to | | | | paid by your umbrella insurance. Also, as a general |
| 20+ units) in your state or in a number of states | | | | rule, the umbrella policy will not cover intentional |
| you can use your umbrella to cover that | | | | acts. |
| exposure as well. And the cost is very nominal - | | | | |