What’s an Umbrella Insurance Policy, Anyway?
We’ve got your answer—and the how, why, when and where.
Your dog gets loose and crosses paths with your neighbor, knocking her over. She claims damages greater than what your home insurance policy covers—and now you may have to pay out of pocket to cover the rest, and your home insurance premium may rise.
That’s just one of many scenarios in which the costs exceed the coverage from your auto, home or renters insurance policies. So, what can you do? Consider getting an umbrella insurance policy. Here’s what you should know:
What’s an umbrella insurance policy?
An umbrella policy protects you when you’re liable for injuries or property damage that exceeds the liability limits on your home or auto insurance. It’s usually available in amounts beginning at $1 million, and the premiums are reasonable—often less expensive than simply increasing the liability coverage limits on your existing insurance policies.
How does an umbrella insurance policy work?
Suppose your home insurance policy covers you for up to $500,000 in liability damages. When you buy a $1 million umbrella policy, it will cover liability damages that go over your home insurance limit, meaning you’re covered for up to a $1.5 million liability claim.
Why is an umbrella insurance policy important?
An umbrella insurance policy through AAA can protect your assets (including a house) or future income, both of which could be targeted in an expensive liability lawsuit. It’s especially important if you’ve increased your liability risk, such as adding a swimming pool or having a teen who recently started driving.
When may I need an umbrella insurance policy?
Serious accidents can happen when you least expect them—like dog bites, slip-and-falls on your property or at-fault fender benders. Or, you could find yourself facing a lawsuit over incidents like your child getting into a fight or even posting a negative review of a business.
Here are more scenarios in which an umbrella insurance policy can help:
- A guest slips and gets injured at your home’s swimming pool.
- Your teen causes a serious accident that injures others.
- A tenant becomes ill from mold in your rental property.
- Your home repair pro gets injured while fixing your stairs.
- A candle catches your condo on fire, damaging several homes.
Where can I get an umbrella insurance policy?
Contact your insurance agent for a policy review. You’ll be able to see if you have enough liability coverage, and your agent can help you decide if an umbrella policy is right for you.