What Is Umbrella Insurance?
An umbrella policy supplements the liability coverage offered by your homeowners insurance and personal auto insurance. If a claim against you exceeds your available liability coverage, an umbrella policy can help make up the difference.
Basically, an umbrella policy acts like an extra layer of protection. It lays on top of your personal liability coverage and extends its limits. This is why you can’t buy an umbrella policy unless you have a home insurance or auto policy first.
You also must have a minimum amount of primary liability coverage before you can purchase an umbrella policy. For us, that typically means $300,000 in personal liability coverage and $500,000 in per accident auto liability coverage.
How Does Umbrella Coverage Work?
The liability portion of homeowner’s insurance and auto insurance covers damage you may be responsible for, like a visitor's injury that happens on your property or car accidents involving you. So say that visitor took such a spill on your front porch that their medical bills far surpass the $300,000 you have in liability protection. They want you to pay for the full $350,000 they've racked up in medical bills and missed work.
This is where umbrella insurance can help out. Instead of paying the remaining $50,000 out of pocket after your insurance covers $300,000 of the claim, you can draw on your umbrella policy to pay it.
You can draw on umbrella insurance when you need extra liability coverage.
What Does Umbrella Insurance Cover?
Because an umbrella policy extends the limits of the underlying liability insurance, it typically covers incidents your home and auto insurance cover:
- Bodily injuries to other people
- Property damage you cause
So if you've ever been in an auto accident, if your dog ever bites the mailman, or if your kid ever hits a baseball through the neighbor's window… these are all situations when your umbrella insurance may need to step in if the claim gets too expensive.
What Umbrella Insurance Doesn't Cover
It doesn’t usually pay for:
- Your own injuries
- Residents' injuries
- Damage to your own property
- Liability claims against your business
- Damage and injuries caused by intentional or criminal acts
Give us a heads up if you use recreational vehicles, like an ATV. While some insurers won't cover damage associated with these vehicles, we can help keep you protected.
When Do You Need an Umbrella Policy?
Homeowners with a high net worth may want to consider umbrella coverage. The logic here is the more money someone has, the more likely they are to be targeted with a lawsuit. However, there are plenty of other situations that may increase your likelihood for an expensive lawsuit.
That's why you may want to consider an umbrella policy if you:
- Are a landlord
- Coach youth sports
- Volunteer
- Serve on a board
- Own a pool or trampoline
- Host a lot of parties or gatherings
That list isn't exhaustive, so think about the risks you face. Ask yourself:
- Can I cover a lawsuit out of pocket?
- How valuable is my property?
- Do I regularly take part in activities where I might accidentally hurt someone?
These questions can help you decide if an umbrella policy is right for you.
How Much Is Umbrella Insurance?
Adding an umbrella policy contributes to your overall costs, but you might be surprised by how affordable it is. Policies can cost as little as $100 for $1 million in additional coverage.
You can typically choose up to $5 million in umbrella coverage, but as you might've guessed, the more coverage you select, the higher the premium.
Your driving activity and the age of drivers on your auto insurance plan may influence the cost of an umbrella policy, too.
Does Kin Offer Umbrella Insurance?
Not yet, but stay tuned! We're launching new products every month, and this coverage is coming soon.
