At Veritas Insurance, we write a lot of home, business, and auto policies. Oftentimes, however, we find that many of our clients do not fully understand what a personal umbrella policy is. In my opinion, it’s one of the most important policies for any individual or business.
Are You Eligible for Umbrella Insurance?
In order to have an umbrella policy, you must have underlying limits on your home, personal auto, and/or watercraft policies. Each insurance company requires different limits on each of these policies in order to be eligible for a personal umbrella. For example, good limits which most insurance companies will accept are $300,000 on the home, $250,000 bodily injury for an individual on the auto, and $300,000 on the watercraft.
How Umbrella Insurance Works
So when would you ever use this umbrella policy? Let’s say you are golfing in the Ridges in Johnson City, TN. You hit a golf ball into the windshield of a passing car, causing a wreck.Or say you bake a pie for your picnic at Warriors Path State Park in Kingsport, TN, and everyone who eats it gets food poisoning. Or you go hunting and accidentally shoot someone. Your dog (or even your kid!) bites someone. You throw a party and someone falls and injures themselves. Your child breaks another kid’s arm playing football. And the list goes on. These are just a few examples of the types of accidents that would be covered by your home, auto, or watercraft policies. If these accidents exceed your limits on these individual policies and you do not have a personal umbrella, the rest will be coming out of your pocket.
In general, these policies do not cover your own property–they only cover you when you damage someone else’s property. However, some companies allow you to extend this umbrella over your uninsured motorist policy. This is extremely important for people who do not have individual disability or life insurance, as it will cover you and your family up to the limits of your umbrella (often 1-5 million) in the case that you are severely injured or killed by an uninsured motorist.
The Umbrella Coverage You Need
How much umbrella insurance coverage is enough? That’s a question you have to answer yourself. Keep in mind that the pricing on these policies is very inexpensive. For a couple over the age of 25 with no young drivers in the house, a $1 million umbrella policy costs around $12 a month.
In summary, an umbrella insurance policy is a very important policy for individuals and businesses as it provides coverage when your policy limits are too low. Talk with your insurance agent or one of our insurance professionals to determine what the best coverage is for you.
If you have any questions about whether you need an umbrella insurance policy, please contact our East Tennessee office at (423) 292-4142. As an independent insurance agency, we work with a number of different companies to find you the best rates and coverage for your needs.