Not just for a rainy day, a personal umbrella insurance policy is a tool to protect your assets from high liability claims. A personal umbrella policy, PUP or UMB, is recommended for almost any homeowner that owns a pool, trampoline, or have youthful drivers. In addition, if you have assets over your liability limit, it can be an inexpensive addition to your insurance tool belt.
If you have home equity and a steady income, you should consider purchasing a Personal Umbrella Insurance Policy. If you have a youthful driver or pool, you absolutely should have a policy in place.
What does an Umbrella policy cost?
Most personal umbrellas start with $1 million in coverage and subject to underwriting, offer higher limits. Most policies for the first $1 million can be purchased for $250-500 per year.
When would I use my Umbrella policy?
An Umbrella is designed to set on top of your existing policy limits. Meaning, you couldn’t purchase an Umbrella policy only, instead you must have existing insurance policies in place. In addition, most Umbrellas will have requirements that dictate the limits of liability on your home and auto.
For example, Auto-Owners will typically require $500,000 in homeowners liability and $500,000/$500,000/$100,000 liabilities on auto to be eligible for a mono-line umbrella policy. However, you can save on these underlying policies by bundling all insurance policies with Auto-Owners, which lowers the auto liability requirements to $250,000/500,000. It’s typical of other carriers to offer bundling discount and lower limit requirements as well.
Based on the examples above, should there be a qualifying claim, payout would happen from your underlying policies first. In the example of your home, a $1 million dollar claim would first pull from your homeowners insurance, then an additional $500,000 from your umbrella policy.
Without the umbrella policy in place, the client would be responsible for $500,000!
What happens if I don’t have an umbrella and the claim exceeds my liability limits?
Every state is different, but typically for every dollar over your insurance limits, you are personally responsible and your assets would be considered for payment. Its common for wages to be garnished and liens to be put on a personal home. A client wouldn’t necessariliy lose their house, but in case of the sale of the home the debt would be paid before proceeds would be paid out to the owner.
How to buy an Umbrella?
To get started, have your homeowners and auto declaration pages available. Also, have a list of any risks like number of vehicles, off road toys, boats, and other properties like rental and investment land. Then, give me a call to discuss appropriate limits and see if a monoline or bundled policy makes sense.
I’m happy to advise on if an umbrella is appropriate for you. Give me a call anytime to get started.
