Insurance can be a gamble and sometimes you never know when you’re going to need it. Some homeowners never end up using their insurance policies while others file multiple claims a year. Insurance is a gamble. But when gambling with the safety of your home, it’s best to be properly protected.
That’s where umbrella insurance comes into use. Homeowners insurance policies offer you basic coverage of your home, belongings, and personal liability. You’re covered for any listed perils that could damage your property. Common insurance policies cover perils such as fire, theft, and hail. You’ll often see flood and wind damage excluded. By covering yourself with an umbrella insurance policy, you’re protecting yourself from any liability that occurs on your property.
Basic homeowners insurance plans will provide you with basic liability coverage, but an umbrella policy extends what is protected. Keep in mind, however, that while many more cases will be covered with an umbrella insurance policy, some exclusions will still apply. It’s important to know what is covered and what isn’t so you’re not left stranded after a disaster.
First, what Is covered?
Umbrella insurance is a liability protection policy. This means that if someone is injured or harmed while on your property, you will be covered for the expenses resulting. Liability coverage is offered in your basic homeowners policy but not to the extent that an umbrella policy does. What exactly does your umbrella policy cover?
- Other’s medical bills – If someone is injured while staying on your property and decides to sue you for medical costs, your umbrella insurance should cover you. Someone else’s liability is typically covered from most perils under umbrella insurance.
- Other’s funeral costs – In the unfortunate event that someone passes away from an incident occurring on your property, the family might require you to pay for funeral costs. If you are asked to cover funeral costs, your umbrella insurance should help pay for the event.
- Defamation lawsuits – Any lawsuits against you that result from liabilities occurring on your property could be covered by your umbrella insurance. Typically, lawsuits and any legal related issues resulting from liabilities will be covered by an umbrella policy.
- Legal defense costs – Legal defense can be expensive and falls in line with lawsuits. If it’s related to a liability occurring on your property, your umbrella insurance should cover any related costs.
- Tenant injuries – If a property you are renting out has a tenant injured or harmed, you will be covered by your umbrella insurance. With a basic homeowners insurance policy, you typically will need a separate plan for a rental property. With umbrella insurance your rental property will be covered from liability related issues.
Umbrella insurance does extend your coverage beyond that of a basic homeowners policy. Some perils and situations are still excluded from umbrella coverage and can put you in financial risk if not properly taken care of.
What is excluded from policies?
As mentioned above, knowing what is not covered by an umbrella policy will allow you to protect yourself from unknown circumstances. The following are some situations that will not be covered by an umbrella policy.
- Personal injuries – If you are hurt from an issue occurring on your property, you might find that your umbrella insurance does not cover any costs. Personal liability is often left uninsured by umbrella policies. You will be required to cover any medical bills resulting from personal injury on your property
- Personal belongings – Any items lost from damages on your property may not be replaced by your umbrella coverage. Your homeowners insurance should cover your belongings up to a specified limit. If the cost to replace your belongings exceeds the insurance limits, you might be left to cover payments yourself.
- Intentional damages – Any damages that occur purposefully or from user neglect will not be covered by your umbrella policy.
- Business liabilities – If for some reason, your business is liable for any injuries that occur on your property, your umbrella insurance will not cover the cost.
Keep in mind that your umbrella insurance is a supplemental policy and not a standalone plan. You also have to qualify for an umbrella policy by having enough home and auto insurance. If you only have $10,000 in homeowners insurance, you can’t buy a one-million-dollar umbrella policy. Your umbrella policy does not cover anything you own. You’ll be protected from liabilities related to someone else, but not a liability of your own.
Umbrella insurance protects you from other’s liability costs. You will not be covered for personal loss – injury or belongings – but if something happens to a guest or a tenant, your umbrella policy will cover you. Speak with your insurance agent to find out your best option when it comes to umbrella insurance.