Imagine this. You are hosting a nice, large dinner for your housewarming party. Not only have you just purchased and furnished your new home, you have also gotten homeowner’s insurance for it with a personal liability limit of $250,000. The night is going really well until all of a sudden, you hear a thud and a scream. One of your guests has slipped on your porch and has an injury that racks up large medical bills.
Unfortunately, your guest decides to sue you and the court rules that you owe her $500,000. As your liability limit on your home is only $250,000, you’ll have to pay the other half out of your own pocket. It being a large number, that could mean picking up a lot more shifts or taking out a lot of your savings. That’s where umbrella insurance would help greatly and we here at Great Park Insurance in Irvine, CA would be glad to explain how it does.
Purpose of Umbrella Policies
Like we described in the scenario above, umbrella insurance is useful for personal liability that could be above the amount your homeowner’s insurance or auto insurance will cover. It is useful because with most reasons for insurance, we never know what can happen in our daily lives that will present us with a loss.
Umbrella insurance is also helpful because it covers things that other policies may not. Some of these things include libel and slander, amongst other hazards that a person may sue you for. It also just does not cover the named insured but also their family members or people within the household.
When Would I Need Umbrella Insurance?
Umbrella insurance may not be for everyone. It makes sense if the total amount of your assets is not entirely covered by the liability limits of your homeowners or auto policies. However, it helps to take into account whether it is likely that you will be sued for much greater amounts. You would have to consider whether you are at a bigger risk of having more personal liability or not.
Not only does it concern your assets but your lifestyle or usage of your property as well. This could include things such as renting out your home, hosting many parties or adding a pool to your property. Overall, everyone can benefit from an umbrella policy as anyone can be sued. It is important to consider the likelihood if you are considering whether it is entirely necessary for you or not.
Exceptions to Umbrella Insurance Coverages
Although umbrella insurance is useful for adding more coverage to things that are typically not included in other policies, that does not mean it does not come with its own exclusions. One exclusion is if you were to create damage to your own property as that has nothing to do with liability of damaging another’s property. Also, if damage was caused on purpose, that is also not included. If you were to want to acquire liability for your business, you would have to go with a business liability insurance policy.
In general, an umbrella insurance policy can be useful for extra peace of mind. If you have other questions about whether you would benefit from one, please give us a call at 949-387-3242. Let’s get insured!