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Why You Probably Need Umbrella Insurance

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Why You Probably Need Umbrella Insurance

A family under an umbrella in front of their home.

We all make mistakes. That’s why we buy liability insurance. We buy auto insurance, boat insurance, homeowners insurance and other policies to cover us in case we cause – or are otherwise responsible for – an accident that injures someone or damages their property.

But what if your teenage daughter accidentally puts the car in drive instead of reverse and crashes into a convenience store, causing damages that exceed the liability limits of your auto policy?

Or what if your sister-in-law visits with her new boyfriend and he falls down your front steps and sues you for the cost of his medical bills, plus lost earnings, and pain and suffering, which adds up to a total that far exceeds the liability limit of your homeowners policy?

In these cases, any amount over the liability limit of your policy is your responsibility to pay out of your own pocket. The consquences could lead to financial ruin. Unless you have an umbrella insurance policy.

Umbrella insurance picks up where your other polices end, to provide extra liability coverage beyond the limits on your auto, homeowners and boat insurance. If you are at fault for injuries or damage and your other policies aren’t sufficient to cover the costs, your umbrella policy kicks in to cover the difference.

To help illustrate how umbrella insurance works, imagine this nightmare scenario: You run a red light and ram into a Mercedes full of attorneys on their way to the courthouse. The car needs $40,000 in repairs, and medical bills for the driver and passengers totals $360,000. Plus, one of the passengers of the other car won’t be able to work for six months due to his injuries and he sues you for $300,000 in lost earnings.

You are responsible for paying a total of $700,000. If your car insurance’s maximum for liability coverage is $300,000, the remaining $400,000 will have to come out of your pocket

On the other hand, if you had umbrella insurance, it would pay the $400,000 difference between what your car insurance covers and what you still owe. An umbrella policy also provides coverage for your legal costs in the lawsuit.

Umbrella insurance is for people who have a lot of assets and future income to protect, even if your income is limited now. An umbrella policy should cover at least the value of your assets.

A $1 million umbrella policy should cost approximately $300, according to the Insurance Information Institute.


Here’s are a list of reasons to carry an umbrella policy:

  • You serve on a charitable board – You could be sued for a board-related issue.
  • You have a swimming pool, pond or trampoline – if a neighborhood kid gets hurt, you could be sued.
  • You have dogs, horses or other large animals – if your animal causes an injury, you’re on the hook.
  • You manage a family trust – that money makes you a target for lawsuits.
  • You host large parties in your home – if you get sued for an injury, your homeowners policy would pay to its limit, then your umbrella policy would kick in.
  • You have a high public profile – you need to protect yourself from defamation lawsuits, like libel and slander. These costs are covered by umbrella insurance.


To start a discussion about whether you need umbrella insurance and how much coverage might be right for you, call 1-888-OK-GLENN or 609-641-3000 for a free quote today.


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