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Clayton Hanley Insurance Blog

All You Ever Wanted to Know About Insurance

How Does Umbrella Insurance Work?


You may have been encouraged to purchase umbrella insurance, along with a home or auto policy. If you’re puzzled about how umbrella insurance works, this post is for you. Umbrella insurance is a low-cost way to add high liability coverage to your existing policies. Here’s what you need to know.

What Is Umbrella Insurance?

Umbrella insurance is supplemental insurance that kicks in if you exceed the cap on your liability coverage elsewhere. For example, your home insurance provides $200,000 of liability coverage. But a visitor to your home slips and falls on your icy front steps, incurring medical bills of $500,000. (Did you know that half of all accidental deaths in the home are caused by a fall?)

The visitor sues you for not making your front entry safe, and the judge determines that you must pay the $500,000 because you’re at fault in the injury. With only $200,000 of liability coverage from your home insurance, where does the other $300,000 come from? You would have to pay it from your savings and other assets, including potentially the sale of your home, unless you have umbrella insurance.

Umbrella insurance is activated once you go beyond the limit of your homeowner policy. Instead of losing everything you own, the umbrella insurance policy makes up the difference. Umbrella insurance often starts with coverage of $500,000 or $1 million and can go higher depending on your life circumstances.

What Does Umbrella Insurance Cover?

As the name implies, umbrella insurance gives you broad coverage for a range of needs. Not only does it protect the home, auto, or boat policy holder, but it also covers members of their households. So, if your teenager has a bad car accident injuring others or serves minors alcohol in your home when you’re not there, the policy will cover legal consequences in these scenarios, above and beyond your auto and home policies.

Additionally, umbrella insurance protects you when you’re away from home. If you’re on vacation in Europe and at fault in a rental car accident that results in a judgment against you, your umbrella policy can be applied.

If your child’s classmate with a peanut allergy becomes ill due to snacks you sent to school, not realizing they contained peanut butter, and the parents successfully sue you, your umbrella insurance can be utilized then, too. Your dog bites a stranger while out on a walk? A textbook example of when umbrella insurance is smart protection.

Adding umbrella insurance to your current policies is quick and easy. To learn more or start a quote, call Clayton Hanley Insurance at 314-487-2921 today, or contact us online to tell us how we can help you find the right coverage.