Umbrella Liability Insurance Cost

If you possess anything valuable, chances are you need an umbrella policy to protect it as well. Whether ill-founded or factual, claims are common in our society and the asset holder must be prepared for them before they strike.

Here we will discuss what an umbrella policy is, how it functions, and what are the costs involved in getting one.

What Is Umbrella Liability Insurance

Umbrella liability insurance is an extra layer of coverage to keep you safe in case of litigious claims and lawsuits. It acts as secondary coverage. In works in combination with pre-existing other insurance policies. It is a type of personal liability insurance that kicks in after your homeowner’s, auto insurance or waterfront insurance runs out. It even covers damages to other’s property, either by yourself or by your dependants. However, it does not provide coverage for damages to your own property by yourself.

Is Umbrella Liability Insurance A Good Idea?

Umbrella liability insurance is a great idea for anyone who might be at risk of being sued and who has anything of value. It protects your property from claims that exceed your basic insurance. For instance, if your teenager throws a party while you are out of town, and one of the guests later gets arrested for driving under influence, you can be sued. Or you may be driving down a snowy road and apply your brakes a little too late before the signal. The one-second delay causes a 5 car accident that rises above your auto- insurance claims. If you are unable to pay these claims that rise beyond your insurance, the litigants may come after your assets, including your car, your home, and even your life-savings. Almost anyone can be taken to court on a lawsuit. Umbrella liability insurance is a good idea in such scary scenarios.

How Much Umbrella Liability Insurance Do I Need?

Depending on your assets at risk, you may need between $1 million to $3 million or more in umbrella liability insurance. As a rule of thumb, the umbrella liability insurance should cover more than the value of your assets. For instance, if the judge decides against you and makes you liable to pay for damages exceeding your assets, you will be asked to forego a certain amount from your future earnings in favor of the litigant. A sufficient amount of umbrella insurance thus not only protects your assets but also your future earnings.

Umbrella Liability Insurance Cost

Umbrella liability insurance costs much less than other insurance. Typically, you pay from $150 to $300 annually for umbrella insurance worth $1 million, according to the Insurance Information Institute. For every additional $1 million after that, you pay $75 to $100 annually.

Before umbrella insurance becomes available to you, your insurance provider will check if you qualify for it or not. To have a successful application, you would need:

  1. At least $250,000 in liability insurance on your auto insurance
  2. At least $300,000 in liability insurance on your homeowner’s plan
  3.  At least $100,000 of property damage liability coverage

Additionally, some insurers have limitations on your profession too i.e you may not qualify if you are a professional entertainer, an athlete, a sports star, a media personality, and in many states, a politician. Before you are awarded the umbrella insurance policy, the insurer may also check the number of drivers in your home, the past driving record of each member including violations and accidents, and the number of cars, rental property, and waterfront property you may own.

Commercial Umbrella Insurance

Commercial umbrella insurance is a cost-effective way to keep your business safe from claims and lawsuits. It will also help to pay off legal fees and provide legal help. Businesses that interact with clients with a high net worth, or have a lot of traffic, use delivery trucks or vehicles, or have assets they wish to keep safe, should consider getting umbrella insurance. If there is a large lawsuit, personal liability may not be able to provide complete coverage. Your business will have to suffer as it pays for any leftover amount. If commercial umbrella insurance is in place, the financial damage to your business may be easily averted in a very cost-effective way – in as little as a few hundred dollars.

Umbrella Insurance Company

A number of companies offer umbrella insurance for personal and commercial use. Here is a list of the 6 best umbrella insurance companies of 2020:

  1. Liberty Mutual
  2. Chubb
  3. USAA
  4. Travelers
  5. Geico
  6. Allstate

You may want to consider which policy to take depending on whether you need it for your family, small business, or if you’re an avid traveler or belong to the military community. Talk to an agent before you make a final decision.

Does Umbrella Insurance Cover Breach Of Contract?

A breach of contract is a violation of any of the terms that are agreed upon in a contract. This can include payments not made on time, providing sub-quality material, not meeting deadlines, failure to provide the agreed-upon goods and services, etc. Amongst a wide range of claims, umbrella insurance also covers breach of contract. Generally, a claim for a breach of contract is made against a service or goods provider, hence you need to have commercial umbrella insurance to fight it off.

What Does Umbrella Liability Insurance Not Cover?

Where umbrella insurance covers a wide variety of claims, from waterfront claims, accidents, dog bites, slander, property damage, and employee accidents, there are certain things which it may not provide coverage for. These include:

  1. Injuries sustained to yourself or your dependents.
  2. Damages to your own property.
  3. Damages resulting from certain dog breeds that your insurance does not cover.
  4. Activities are done intentionally that result in harm or with criminal intent
  5. Injuries resulting from using vehicles that are not covered by the policy

Basically, umbrella liability insurance will not cover any injuries that you incur yourself. It will also not cover claims on your business unless you have a separate business umbrella coverage as well.

What To Remember

Umbrella liability insurance is a low cost, high coverage, secondary policy that covers the costs of your primary policy that can be your homeowner’s plan, auto insurance plan, personal liability insurance, etc. Starting at a minimum of $1 million dollars, it is mostly offered in increments of $1 million on top of your basic insurance. If you have valuable business or personal assets, you might want to consider getting umbrella insurance to protect them.

Charles Bains

Charles Bains

Charles Bains started his insurance career as a marketing intern before pounding the pavement as a commercial lines agent in Orlando, FL. As an industry journalist, his articles have appeared in a variety of trade publications. His insurance television career, short-lived but glorious, once saw him serve as the expert adviser on an insurance-themed infomercial (yes, you read that correctly). Having recently worked for various organizations, coupled with his broader insurance knowledge, Charles is able to understand our client’s needs and guide them accordingly. He is a gem for Insurance Noon as his wide area of expertise and experience have been beneficial in conducting further researches to come up with solutions and writing them in a manner which is easy for everyone including beginners to comprehend.