To understand what your personal umbrella policy does and does not cover, you need to understand what all of your underlying insurance policies, like home and auto cover first. Most personal umbrella policies extend the liability portion of these policies, including automobile, homeowners, motorcycle, boat, RV, and most other specialty policies.
First and foremost, in order to qualify for a personal umbrella policy, you must carry the required coverage limits for liability on each of your underlying policies. You will not be able to buy a personal umbrella policy to sit on top of your auto or homeowers liability coverage unless you carry the minimum limit and meet the insurance carriers’ limit requirements.
So what if your homeowners or auto coverage limit of liability isn’t enough? What if you’re involved in a car accident that causes major damage, injury, or even a death? You could be sued for hundreds of thousands, or even millions, far exceeding your liability policy limits. That’s what your umbrella policy is for and it would pick up the difference, up to the limit you’ve purchased.
Personal liability covers:
Personal liability does NOT cover:
Again, an umbrella policy will offer you expanded protection over and above the coverage you currently have. So if you are in a car accident that exceeds your coverage limits, your umbrella policy will kick in and pick up the difference. But what if you are in an accident because you were doing something that is considered illegal, like drag racing? The illegal action may void your auto coverage and, as such, void your umbrella policy as well.
In the case of a homeowners policy, your liability insurance may have certain exclusions, such as denying coverage for certain breeds of dogs that are considered dangerous. If you buy a policy and then buy an excluded breed, you may not have coverage if that dog bites someone. And just as with your homeowners policy, your umbrella policy would not go in to affect either.
While most umbrella policies will also exclude items that are excluded on the underlying policies, there are some exceptions. For example, people with home businesses often don’t realize that business coverage is not part of the standard homeowners insurance policy. If someone were to come to your home as part of your business you might not have coverage if they were hurt and tried to sue you. On the other hand, you might be able to ask your umbrella policy carrier to extend extra business coverage options to you. This, of course, is a grey area and it is important to address all of your personal risks and needs with your insurance professional by adding the right endorsements to your underlying policies.
The insurance professionals at Foundation Insurance Group, located in Falls Church, Virginia and St Matthews, Kentucky are always available to answer your questions and concerns and can tailor a policy that specifically meets your needs. Contact us today. We’re happy to review your current policies and make suggestions to limit your exposures.