TAMPA, FL. - Your teenager, Alyssa, is babysitting your next door neighbors’ children. Alyssa walks outside to throw the trash out. As Alyssa walks back into the house, she hears screaming and sees one of her neighbor’s children on the floor in pain. He just broke his arm. He’s rushed to the hospital and his parents are deeming you responsible for his medical bills. This is a perfect example of when Umbrella insurance would come into play. 

Let’s say you’re driving your children and their friends home from basketball practice. Suddenly, you get into a car accident. Your children are fine, but one of their friends is injured. If you have an umbrella insurance policy, you would be able to cover their medical expenses even if they run into the $100,000s.

Umbrella insurance is like extra liability coverage for whatever kooky thing that may pop up out of nowhere. “Umbrella insurance offers further protection against property damage, incidents/injuries involving non-household members that occur at your home.  It also covers libel/slander, malicious prosecution, landlord liability and business liability,” (The Balance, “The 6 Best Umbrella Insurance Options of 2020”). This coverage will take care of additional claims that your auto or homeowners policies might not cover. Life is pretty unpredictable and anything can happen in a split second. Umbrella insurance would primarily kick in when claims exceed your policy limits.  

Another example (this actually happened): a homeowner had a grease fire in her kitchen. She immediately rushes in to extinguish it, then opens all the windows to get the soot out of her house. Her next door neighbor, a lawyer, just so happened to have his windows open and his home was down wind. He sues her because he says the whole house now smells like smoke and his clothes must be dry cleaned. He sues her and wins $500,000. In this case, the homeowner’s coverage only paid part of the $500,000 and the homeowner owed the remainder.  If the homeowner had umbrella insurance, the remainder would have been paid by them.   

Who should carry Umbrella Insurance?

Car owners, people with assets to protect, parents, social media users, people who like to entertain and host parties, pet owners, homeowners, volunteers, travellers, boat/watercraft owners, RV owners or people who own rental properties. 

“Without an umbrella policy, your assets, savings, and even future income could be in danger because you could be required to pay all costs over your policy's liability limit,” (SafeCo, “Umbrella Insurance”). 

We live in a world where people have become “lawsuit happy,” and suing is like the newest fashion trend everyone has to take advantage of. Umbrella policyholders can pay anywhere from $100-$500 a year for a $1 million insurance policy. Really, it’s not that much money. And to ensure you have FULL COVERAGE for WHATEVER may happen, it’s a no brainer!

Sources:

SafeCo

The Balance

Investopedia

Diamond Cut Insurance Group, Inc.