Understanding Umbrella Insurance

Brought to you by Heiner’s INsurance Center

What is umbrella or excess liability insurance? A simple definition is that it’s an insurance policy that provides coverage above and beyond your auto and home policy limits—think of it as an umbrella over the top of those other coverages.*Here are a few examples to help explain:

  1. Your dog runs out of the house and viciously attacks a neighbor who was going for a walk and minding her own business. Your neighbor sues you to cover her medical bills, lost wages and pain and suffering.
  2. Your daughter gets into a fight at school and punches another girl,breaking her nose. The girl’s parents sue you.
  3. You cause a 10-car accident and your auto insurance property damage coverage isn’t high enough to pay for all 10 accident victims’replacement vehicles. Nor is your personal liability coverage high enough to pay for their medical bills.
  4. You send sandwiches to your son’s school for a field trip lunch. Several students become sickened with food poisoning and their parents sue you.
  5. Your teenager throws a party at your house while you’re out of town. Someone brings alcohol to the party, and one of the party guests gets arrested for driving under the influence on the way home. You get sued.

While these examples may be covered by your standard policy limits, there is potential that the damages awarded in a lawsuit could cause these numbers to get quite large. If you are found responsible for higher-sum injuries or damages, your coverage limits may not be enough. If you do not have enough coverage on your home or auto policy, you would be responsible for the difference. If you have an umbrella policy, it would kick in when your primary policy limit is exhausted or if your primary policy does not provide coverage and the umbrella does. Umbrella insurance provides peace of mind, knowing you are protected with higher limits and broader coverage.

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