Understanding Umbrella Insurance

If you're in the market for homeowners' or auto insurance, one term that you may have seen or heard when shopping around is "umbrella insurance."

But what is umbrella insurance? What does it protect? How is it different from a standard homeowners insurance policy? And — maybe most importantly — how can you decide whether or not you should buy umbrella insurance?

Below, our public claims adjuster in central Florida offers a closer look at umbrella insurance so you will be better prepared to make an informed decision about your insurance needs.

What is umbrella insurance?

Umbrella insurance has nothing to do with the weather, despite its name. Instead, it's a type of personal liability insurance designed to offer additional coverage on top of what is provided by your homeowners' or auto insurance.

It's basically additional insurance that you can buy on top of your homeowners' or auto insurance policy to give yourself more peace of mind that if something were to transpire, you would be covered.

So why do they call it 'umbrella' insurance? Well, much like you would open an umbrella during a sudden rain shower to keep yourself dry, your umbrella insurance would open during an emergency to shield you.

What does umbrella insurance cover?

Generally speaking, umbrella insurance offers liability coverage. This means that if you find yourself the target of a personal liability lawsuit in excess of what is covered by your homeowners' or auto insurance policy, the umbrella policy would kick in and fill the gap.

Importantly, umbrella insurance usually covers all of your family members or household, not just you, the policyholder. This makes it a particularly valuable insurance product for parents of teenage kids who are just learning to drive and may be more likely to have an accident).

The coverage provided by umbrella insurance is usually broken into the following categories:

Personal or Bodily Injury

Umbrella insurance can offer coverage if you (or a person in your household) are determined to be at fault for causing personal or bodily injury to another person. It is often used to pay for medical bills and additional liability claims connected to the injury. Instances of personal or bodily injury events when umbrella insurance may kick in include:

You are to blame for a major car accident that leads to substantial bodily injury to another person.

You are to blame for a multi-car accident where several people are hurt.
Your pet injures somebody.
Somebody gets injured on your property.

Property Damage

Umbrella insurance can offer coverage if you (or someone in your household) are liable for causing damage to another person's property. It is generally used to pay for the restoration or replacement of damaged or demolished property. Instances of property damage events where umbrella insurance may kick in include:

You are to blame for a car accident where another person's vehicle is totaled.
You drive into a structure like your neighbor's fence or house.
You cut down a tree on your land, and it falls abruptly onto your neighbor's car.

We hope this helps you better understand umbrella policies. Contact us today if you need a public claims adjuster in Central Florida. We are here to help!