Umbrella Policies - What are they and do I need one?
by Heather Mosher

Umbrella Policies – What are they and do I need one?

This is the second in a series of video blogs designed to answer our customers most frequently asked questions. Today’s blog is about two things:

  1. What is an umbrella policy?
  2. How do you know if you need one?

An umbrella is a liability policy, so it’s important to understand what liability protection actually means.  Liability is that thing that’s going to protect you and your assets if you’re found negligent and someone tries to come after you; often in the form of a lawsuit.

So, liability is already found on most insurance policies that you can purchase.  For instance your home policy already has liability, new vehicles have liability, things like watercraft or recreational vehicles have liability coverage already.

An umbrella, then rides along on top of things; providing an additional amount of protection.  For instance, an umbrella policy generally gives you anywhere starting from $1,000,000 to $5,000,000 of additional protection. If your home has $500,000 of coverage, which is a common amount of coverage to find on a home policy; the umbrella policy riding on top of that gives you an additional $1,000,000 of coverage.  The total of these two policies gives you a $1,500,000 in liability protection on your homeowner’s policy.  Your vehicles work in the same way.  Your vehicles have $500,000 dollars on the underlying policy and the umbrella riding along on top gives you that additional $1,000,000 to give you a total of $1,500,000.

The second thing we are most frequently asked, do I need an umbrella policy?  To most people, the answer is yes.  If you’re young and you have a lot of future earning potential in front of you and a lot of years left to work, you need an umbrella policy.  This is because often in a lawsuit situation you can have your future wages garnished.  If you are further along in your career, you need an umbrella policy.  This is because you’ve had many years to accumulate assets and you have much more to protect.

What many people don’t understand is that the affordability of an umbrella policy is really quite unique for the amount of coverage that you’re receiving.  Somewhere around $100 – $200 per year is all you’re going to have to pay to have that protection provided.  Talk to your agent to see if you can receive multi-policy credits for purchasing an umbrella policy with your home and auto insurance. Or contactHeather Mosher | 906.315.7235 |

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