We live in a pretty litigious society. We frequently see stories of ugly lawsuits ranging from something as serious as an assault to something as trivial as spilled coffee. One day you might find yourself at the wrong end of one of these conflicts.

Thankfully, umbrella liability insurance is an inexpensive way to protect yourself, and I want you to be informed!

As usual with insurance, there is a lot to know on this topic. Always consult a professional on details surrounding your unique life situation!

What is it?

Umbrella liability insurance protects you from financial damages incurred in an accident where you are deemed personally liable. You could be personally liable for medical bills, legal fees, or damages resulting from a car accident, a fall on your sidewalk, an injury on your trampoline, property damages that you caused, etc.

If there are 2 things we Americans know are expensive, they are 1) medical attention and 2) legal fees! A liability policy pays these fees up to the policy limit.

You Probably Already Have Some Coverage

Thankfully, most home and auto insurance policies do come with a small amount of liability coverage. Generally, a home insurance policy comes with $300,000 of coverage (can differ). That is helpful… but it will do little if you face a much larger lawsuit. Like I said… medical attention and legal fees are expensive!

The liability coverage on your auto policy can be a little more confusing. You might have bodily injury (BI) coverage of $100,000 per person, $300,000 BI per accident, and $50,000 property damage limit. These amounts will differ depending on the kind of auto policy you purchased. Review your policy declarations page so you know what you have!

Why You Might Need More

If you had a $1,000,000 liability policy and were sued for $500,000 for bodily injury after a car accident you caused, you personally pay nothing! The insurance company pays. Now, imagine if you didn’t have a policy and had to pay that $500,000 yourself… the financial damage could change your life forever.

If you have an attractive nuisance on your property, you should seriously consider at least $1,000,000 of coverage. These nuisances include swimming pools, ponds, farm equipment, trampolines, pets, etc. If someone comes to your property (even uninvited) and hurts themselves, you could be liable!

If your lifestyle displays your wealth, you are a target for frivolous lawsuits. If you have considerable wealth, consider increasing the amount of your coverage.

Many liability policies require you to have coverage through your homeowner’s policy first. Ensure that you do! Your $1,000,000 umbrella liability policy might require that you have $300,000 of liability coverage through your homeowner’s policy. Again, home insurance policy pays first. If you dropped your homeowner’s liability coverage, the umbrella liability policy would NOT pay the first $300,000! So, if you were sued for $1,000,000, the umbrella liability policy would only pay the last $700,000. You would be personally on the hook for that $300,000.

How To Get It

We’ve all heard the commercials saying we can save by bundling our insurance. That is generally true! Talk to your current home or auto insurance providers and ask for quotes.

Considering how much protection umbrella liability insurance provides, it is relatively inexpensive. You may get $1,000,000 of coverage for $300 – $500 per year.

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I realize that insurance isn’t the most exciting topic. I also realize that no one wants to pay for a service that they never use! However, I think we all know someone who has been involved in a lawsuit, lost their home due to fire, experienced theft, or was in a car accident. Disasters do happen… and you will be glad you are insured when they do!

Let me know if you have seen an experience where liability insurance really paid off – I would love to hear about it!