Thanks to our friends at Safeco Insurance for their reminder about this crucial distinction!
The golden rule is: an Excess Liability policy provides additional coverage above your auto/home liability limits, BUT it only covers what is included in the underlying policy. In contrast, a true Umbrella is an OPEN PERILS policy – which means that if something is not specifically excluded, you’re covered.
Do you need examples of where an Umbrella could provide coverage, but an Excess Liability policy would not? How about these:
1) While on vacation, you rent a boat. Out on the water, you crash into another boat, severely injuring a water-skier being towed behind. Neither your home nor your auto policy would cover that …. but an umbrella would.
2) You write a blog post about a bad experience in a restaurant. The restaurant owner sues you for libel. Even if the lawsuit is thrown out of court, you still have to respond …. and that can be expensive. An umbrella would cover your costs.
3) You rent a car while overseas, but get involved in an accident which injures another driver. Your auto insurance all the way back home in Texas won’t cover his hospital bills …. but your umbrella will.
For more information about umbrella policies, or to find out whether your current policy is a true umbrella or merely an excess liability policy, give your friendly agent at Memorial Insurance a call!
Source: Safeco Umbrella vs Excess Liability
Dollar for dollar, umbrella insurance is one of the best value coverages you can buy. $1 million of additional protection can cost as little as $150-$200 a year. But do you need it? YES! Here’s why:
1) If you get taken to court after an auto accident, or an incident at your home, you’ll be on the hook for your current assets AND future earnings. Most auto and home policies offer a maximum of $500,000 in liability coverage – if you’re lucky. Legal fees, medical expenses and other associated costs can be cripplingly expensive, and it won’t take long to burn through your auto and home limits …. which is when your umbrella policy comes into play.
2) Everyone’s worst nightmare is to be involved in a serious accident with uninsured or underinsured motorists. Be sure to add UM/UIM coverage to your umbrella policy and you’ll boost your protection against this worst-case scenario.
3) Consider paying for your umbrella by raising the deductibles on your current policy. Increasing your auto deductibles from $250 to $1000 will save you hundreds of dollars per year in premium, which you can use to purchase MILLIONS of dollars in additional umbrella liability coverage!
4) Do you own rental property? Are you a high net worth individual? Consider investing in $2 million, $3 million or $5 million umbrella policies. A good rule of thumb is to get liability insurance limits that are at least as much as your net worth. It is a small price to pay for large amounts of protection.
5) Remember to review your coverages regularly, to make sure your umbrella policy is still offering the right protection for you. Your knowledgeable local agent can provide helpful advice about the coverage you need. Give Memorial Insurance Agency a call and we’ll be happy to assist you with the answers to your questions!