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What Is Umbrella Insurance?


Liability coverage is an essential part of your insurance policy, yet few people take the time to think about it.

Any time you drive a vehicle or invite guests into your home, you’re posing a risk to others (however slight you think it is). And while the liability coverage on your home, renters, auto, commercial, or watercraft insurance policy provides some protection against the damage you may cause to others, it may not be enough.

Thankfully, the insurance industry has a solution: umbrella insurance.

Stay tuned as we explain what umbrella insurance is and why it’s an essential addition to your insurance coverage.

What Is Umbrella Insurance?

Sometimes referred to as excess liability insurance, umbrella insurance extends the liability coverage of an underlying policy.

Umbrella insurance works in two ways.

The first way is by increasing your coverage limit. For example, if your homeowners policy has a liability limit of $300,000 and you purchase an umbrella policy with a limit of $1 million, your new liability limit would be $1.3 million.

The second way is by covering losses that may be excluded from the underlying policy. For example, your homeowners policy may not cover allegations of libel or slander, but an umbrella policy might.

What Does Umbrella Insurance Cover?

As an extension of liability coverage, commercial and personal umbrella insurance cover the costs you may incur if you are sued by a third party.

Umbrella insurance covers:

  • Property damage
  • Medical bills
  • Legal fees (including attorney fees, court costs, and settlements or judgments)

Umbrella insurance does not cover damage to your own property or injuries to members of your household. Your insurance company may also have a list of exclusions (i.e. liability claims that are not covered). These typically include intentional or risky acts.

Why You Need Umbrella Coverage

So if your home and auto policy already come with liability insurance, why do you need an umbrella policy? The plain and simple truth is that standard liability insurance limits may not be enough.

Here in Florida, the legal minimum for property damage liability on your auto insurance policy is just $10,000 and there is no legal requirement to carry bodily injury liability at all! In the event of even a moderately serious car accident, you may be forced to pay out of pocket for the hospital bill, physical therapy, and attorney fees of any drivers you injure.

Florida ranks #1 in the nation for the amount of personal injury cases as well as the highest verdicts. There is a very good chance that you do not have the kind of cash necessary to defend yourself against a lawsuit.

Umbrella insurance, on the other hand, is an affordable alternative to this legal nightmare.

There are some people who would benefit more from having umbrella insurance than others, especially if your lifestyle opens you to more risks. For example, having a swimming pool or trampoline, owning rental properties, or serving on the board of a non-profit organization can all open you up to potential lawsuits.

What Does Umbrella Insurance Cost?

The good news is that umbrella insurance offers extra protection that can save you from financial ruin. The better news is that it’s extremely affordable!

The average cost of a $1 million umbrella policy is just $200 a year. (Yes, you read that right!)

When it comes to insurance, an umbrella policy offers the biggest bang for your buck. If you’re not taking advantage of this incredibly useful policy, talk to your independent insurance agent today to learn more about your options.

Do You Have Enough Insurance?

At Darr Schackow Insurance, we are dedicated to helping Floridians protect the things that matter most.

From homeowners insurance to car insurance and beyond, we want to connect you to the right policies and build a network of coverage designed to provide you with peace of mind.

Contact us today to learn more about the types of umbrella policies on the market and find the right coverage for your budget and needs today.



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