Atlantic Blog

Umbrella insurance is aptly named. Umbrella is liability coverage that steps in when a claim is excluded from coverage, or your other liability limits have been maxed out. Liability, by definition, is the state of being responsible for something, especially by law. Examples of liability include being in an auto accident that was your fault, your dog harming someone, or a person tripping over a crack in the sidewalk of your rental property.   

You might think your home and auto insurance policies are enough for the foreseeable future. Still, there may come a time when your assets and investments are at risk due to a claim. Let's examine five reasons you might want to consider umbrella insurance. 

#1: Above-and-beyond policy limits 

Your home and auto policies provide liability coverage for bodily injury and property damage you may cause to others or that happen on your property. Each coverage has a limit, and once you reach that limit, you'll have to pay the remainder out of your own pocket.  

The most common way to exceed the policy limit is if you cause any major injury, especially one resulting in a disability. Being sued is another, as the fees of a drawn-out legal battle alone could drive someone who isn't properly insured into bankruptcy. These are challenging times.  

Umbrella insurance can step in at a very reasonable cost and add a sizable amount to your liability insurance if you're short on your home or auto coverage. 

#2: Insult added to injury 

Umbrella insurance also covers claims not traditionally covered by home or auto insurance, such as libel and slander. Libel and slander both involve false statements that damage someone else's reputation. The difference is that slander is spoken, and libel is written.  

Anyone who spends time in the public eye (budding entrepreneurs, influencers, content creators, authors, etc.) will find this coverage useful. Social media makes it easy to publish what some could deem inappropriate photos or videos.  

#3: Arrest and release 

Umbrella insurance provides coverage for wrongful arrests, including detention and imprisonment. It also extends to malicious prosecution, which is when one party has knowingly and with malicious intent started a baseless lawsuit against another party.  

The policy will cover all legal and defense costs to secure your release, protect your reputation and get any false charges thrown out. 

#4: Asset protection 

Major lawsuits looking for a big payout can target your current assets and future earnings. Since your liability coverage is paying your defense costs, umbrella insurance can save you from having to liquidate your belongings and remain in debt for years following a legal judgment. 

If you own or rent property, umbrella insurance extends liability coverage to the units you rent. That's important if someone injures themselves and sues you. Umbrella insurance will also step in if your home insurance doesn't cover dog bites or indirect liability such as a guest having too many cocktails at your home and gets into an accident. 

#5: Extended definition of "injury" 

Lawsuits often include a claim for pain and suffering. Umbrella insurance extends the definition of bodily injury to include the psychological cost of an incident if you are judged to be at fault. This is not covered by your home or auto policy, and it can run well into the hundreds of thousands of dollars.  

Umbrella insurance will always step in after the coverage from your primary insurance policies has been exhausted, which protects your assets and future earnings. It does not cover your physical property (just your liability). Still, it does fill many coverage gaps at a reasonable cost.  

Ask your insurance professional about umbrella insurance, the cost, and how much you need.  

When you are with the right carrier, you can feel confident about your coverage. Do you know if you have the right coverage? For a no-obligation quote or review of your insurance policy, give Atlantic Federal Credit Union Insurance a call at 207.373.0342.