How an Umbrella Policy Can Protect You

Posted on Dec 5th, 2023

Accidents can happen to anyone, which is why people take out insurance policies to cover themselves and their assets. While these insurance policies provide for personal liabilities, there are cases where they might not be enough. Umbrella insurance coverage can supplement your claim when accidents result in liabilities that go beyond the limits of your policies.

What Is an Umbrella Policy?

An umbrella insurance policy gives you extra coverage when the protection of your other insurance policies, such as your home or auto insurance policy, falls short. An umbrella insurance policy will also cover incidents that traditional policies may not, such as slander, false imprisonment, and libel. In most cases, your umbrella policy covers members of your household, as well.

How Does an Umbrella Insurance Policy Help Cover You?

Accidents are expensive, and you could be left paying for them out of pocket if your preexisting insurance falls short. For example, you have to file a claim, but the loss exceeds the limit you can claim from your underlying policy. At that point, your personal umbrella insurance would kick in to provide you with extra protection. It’s important to note that in most cases, you’ll need an existing insurance policy before you purchase an umbrella policy.

Most umbrella insurance policies include the following:

  • Bodily injury coverage: This covers expenses that arise from injuries you cause to others due to an auto accident or an accident on your property. It will help to cover medical expenses, funeral expenses, and loss of income costs.
  • Personal injury protection: If someone sues you for invasion of privacy, wrongful eviction, or slander, your umbrella policy will protect you. You won’t be covered if the action was intentional.
  • Property damage coverage: This covers damage you or others covered by your policy cause to someone else’s property in an accident. For example, your child kicks a ball, and it breaks your neighbor’s window.
  • Landlord liability coverage: This comes in handy if you have a rental property. It will give you protection that goes beyond your landlord policy, protecting you against claims involving injuries to tenants or guests.

There are a few things umbrella insurance typically won’t cover, such as:

  • Damages to your personal property — ensure you have home insurance to protect your possessions and property
  • Business loss or damages to your business property — you need business insurance for these incidents
  • Intentional or criminal consequences of your actions
  • Liability you incur from a written or oral contract you enter

A few scenarios exist where personal umbrella coverage may kick in to provide extra protection on top of your existing policy. Let’s take a look at some typical incidents where your umbrella policy may apply:

You’re in a Boat or Car Accident

If you’re involved in a boat or car accident, the expenses can quickly add up, especially when other people have injuries, and you’re liable for medical expenses. Your auto or boat insurance will cover you up to a certain amount, after which your umbrella insurance will kick in.

Your Dog Bites Someone

Your home insurance policy usually provides personal liability coverage if your dog bites someone. A person may sue you for an amount over what your policy provides for expenses such as medical bills and pain and suffering.

It’s important to disclose to your insurance company that you have a dog. If you don’t, there may not be coverage at the time of a claim.

You Drive Your Car Into a Building

If you accidentally drive into a building, such as by accidentally putting your car in drive when you meant to reverse it, your auto insurance policy will cover you up to a certain limit, and your umbrella policy will cover additional expenses.

You Accidentally Injure Someone

If you or a family member injures someone else, your umbrella insurance will give you extra coverage when your auto or home insurance runs out.

Someone Is Injured in Your Pool

If you or your kids enjoy hosting pool parties, pool injuries and drowning are risks you should consider. Most home insurance policies include personal liability coverage, but umbrella insurance can help cover excess damages.

You Damage a Rental Vacation Home

When you have an accident on vacation, your umbrella insurance policy can give you peace of mind. Consider an instance where you light a fire but forget to extinguish it properly. If the fire damages the house, your umbrella policy can help to cover the costs of repairing the home.

These are just a few examples of the incidents that an umbrella insurance policy will cover. You will rarely make a new claim directly from your umbrella policy, except in cases where your auto or home insurance doesn’t cover the specific incident. In most cases, you’ll start by making a claim through your car or home insurance and then turn to your umbrella insurance to cover additional expenses.

Who Benefits From Umbrella Insurance Policies?

Everyone can be in or experience an accident that results in high costs. Because of this, anyone can reap the benefits of an umbrella policy. Your home and auto insurance policy will cover you up to a certain amount for specific incidents. Umbrella insurance policies are a great way to build on your existing coverage and expand the number of situations where you are covered.

It’s especially wise to have umbrella insurance if the total value of your assets, including checking and savings accounts, retirement annuity, investments, and home equity, is greater than your home and car insurance liability limits. This way, you can rely on the extra coverage from your umbrella policy to keep you and your assets protected.

Protect What Matters Most With MPB Insurance

Even if you’ve taken every precaution you can to prevent incidents from occurring, having personal umbrella insurance can ensure you’re covered.

At MPB Insurance, we make it easy to protect what’s most important. With our insurance solutions, you can rest assured you have the coverage you need in various situations. Our unparalleled service offers the capabilities of a large insurance agency with a personal touch. Contact us today to learn more!





The material on this site was created for educational purposes. It is not intended to be and should not be treated as legal, tax, investment, accounting, or other professional advice.

Securities and Insurance Products: