Umbrella Insurance

What is "umbrella insurance"?
Umbrella insurance is coverage over and above the liability coverage in your standard homeowners policy. If someone is injured in your home, slipping on an icy sidewalk, tripping on your stairway, and they sue you, your homeowner's policy should have a limited amount of coverage.If however, the cost of the coverage, either in legal bills, or in the amount of damages that's claimed by the injured party, exceeds what's in the homeowner's insurance policy, your umbrella liability will kick in and provide an additional layer of coverage. It can run anywhere from a million to five million additional dollars of coverage and can be very important. In addition, the umbrella liability coverage could cover you if there's liability losses on your auto policy, or if you own a boat for example, on your watercraft policy. Again if you injure anybody in the course of driving or using your boat you should have auto and watercraft insurance that has a section that deals with liability issues. But your umbrella insurance policy is over and above that, it will give you an additional layer of protection in case the damages, the costs involved, go beyond your standard coverages.

Do I need umbrella insurance?
What does umbrella insurance cover?
Umbrella insurance will cover your legal costs and liabilities if anyone is suing you for damaging their property or injuring them, over and above your standard coverages like homeowner's, auto or, if you own a boat, watercraft insurance. Umbrella insurance is a very important additional layer to have in a very litigious society where people sue on the drop of a hat. Legal bills can mount in a hurry and juries can be very generous in granting damages. You may think that if you have $50,000 in liability coverage under your homeowner's insurance policy that sounds fine, but at a fairly reasonable rate you can get additional liability coverage under your umbrella insurance policy of anywhere from $1 to 5 million more. You are pretty much covered in case someone slips and falls on your sidewalk and they end up suing you for a million dollars. The umbrella insurance policy will kick in.

How do I determine how much umbrella insurance I need?
Umbrella policies are fairly standard. Under your homeowner's insurance policy, there's usually an underlying liability limit. It could be $50,000 or $100,000. If someone should sue you, if they're injured or their personal property is damaged because of something you did or failed to do. Umbrella liability can provide anywhere from $1,000,000 to $5,000,000, or more of additional liability coverage to pay for your legal bills, or damages that are assessed against you. It's something you need to negotiate with your insurance agent, but my advice would be the more personal assets you have, the wealthier you are, the more umbrella liability you need. People tend to go after deeper pockets. If they go after a friend or a neighbor that doesn't have much, they're not going to necessarily sue for $10 million, but if you're wealthy, they're more likely to ask for more, so it's good to have umbrella policies.

How do I get umbrella insurance?
Umbrella insurance is usually available through the same agent or broker where you bought your homeowner's and auto insurance. Frequently, the same carrier that will supply your homeowner's insurance can add an additional layer of liability coverage under an umbrella policy. What you should probably do is ask your agent, at the time you buy your homeowner's insurance - if they haven't brought it up to you; a good agent will bring it up to you - and ask: "Does my carrier for homeowner's also offer umbrella? How much more is it?" In fact, there are some instances where if you buy multiple policies from the same carrier, if you get your auto, your homeowner's and your umbrella under the same carrier, you'll get a discount on the coverage because it's part of a package at that point. So it's always something you should raise with your agent.

How do I make a claim under my umbrella insurance policy?
To make a claim under your umbrella insurance policy you should contact the insurer and your agent as soon as something happens. Don't wait to be sued. If someone has fallen in your yard, if someone has tripped over your dog and broken their leg, or if you've driven your car out of the driveway and backed into somebody's garage and damaged their property be proactive. Call your insurer and your agent right away and say, “Something's happened. I'm not sure if anything is going to come from it but just in case.” Certainly if you're ever served with any papers (legal papers), put under a notice that you're being sued, you need to alert your homeowners and your umbrella liability insurer as soon as that happens so that they can help you coordinate your legal defense.

What kind of documentation do I need to make a claim on my umbrella insurance policy?
To make a claim on your umbrella insurance policy could be very straight forward. A process server shows up and gives you papers alerting you that you are being sued for damaging their property or injuring somebody. It could be more subtle, it could be a letter sent to you saying that someone tripped over your sidewalk or slipped on an icy patch that you failed to put salt on. Umbrella insurance should be claimed after anything that might indicate that you are going to be the subject of a lawsuit. You should let your insurance agent and your umbrella liability insurer know as soon as possible so that they can help ward off a suit, or, if necessary, coordinate your defense.

What do I do if my umbrella insurance policy claim is denied?
If your umbrella insurance liability claim is denied, you have a few options. Most insurance policies allow you to appeal a rejection, in which case all you need to do is provide additional documentation or clarification that could clear things up and get your claim paid. If it's still denied, you might have to get legal counsel. If the lawyer sends a letter, sometimes the insurance company will see the error of its ways and pay the claim. Other times, if you guys are still at an impasse, the lawyer may actually have to sue to recover. In any case, you also have the option to contact and file a complaint with your state insurance department; these are the people that regulate insurers. And you might discover that your insurer has a history of denying these types of claims, which could help you settle your claim.