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Why everyone should have an umbrella insurance policy

Frank Darras Founding Partner and Disability Lawyer DarrasLaw, America’s Top Disability Firm

Many Americans assume the liability coverage they receive with their auto or homeowner’s insurance policy is enough. But the truth is, the vast majority of property owners are underinsured, making them vulnerable to lawsuits. To add more liability coverage, policyholders should start familiarizing themselves with umbrella insurance as a way to cover any policy gaps. This additional coverage typically comes at a very reasonable price for millions of dollars in extra liability coverage.


Do know your what coverage you have, on all your insurance policies

Auto insurance and homeowner’s insurance policies tend to come with $100,000 of liability per person or $300,000 per accident. If the accident caused severe injury to the other party, this coverage is not nearly enough to cover medical bills and a possible lifetime of lost income if the injury was debilitating.

Do determine how much gap coverage you will need

Additional coverage is recommended to fill the gap which your basic policies do not cover. Cars that are leased, generally have mandatory gap insurance specifications for coverage. That will cover the replacement value of the vehicle if it is stolen or totaled. Consider covering the rental of toys like ATV’s and boats since you will be liable if you injure anyone or damage the vehicle. At a wedding reception, cover the cost if anyone is injured or damages the venue. The owners of the location won’t be held responsible and the fine print of the contract you sign with them likely spells this out. There many instances where you will need to have additional liability coverage, an umbrella policy can help fill in any gaps so you are covered.

Do assess your suability

Start off by buying at least $1 million in umbrella coverage then assess any additional coverage you may need on top of that. Those who are wealthy are more vulnerable to lawsuits and will need to purchase more coverage. If you are a doctor, an athlete, or even a business owner, you need to be aware of how suable you really are and proceed accordingly.

Do create your own gap checklist

Find out what gap coverage is available for most umbrella insurance policies. You can make your own list or find one online regarding the types of coverage you will need based on the activities you engage in everyday. This way you can assess what coverage is mandatory versus optional coverage.

Do talk with your insurance agent to get the ball rolling

Your trusted insurance agent is the best one to start talking with about purchasing an umbrella policy. Since they are already familiar with possible gaps in your other policies, they should be able to pull together a comprehensive umbrella policy for you that will work cohesively with everything else.


Do not forget to read the fine print

Umbrella policies typically do not drop down and pay until primary policies pay out the limits. Also be sure to check that your umbrella policy will not have any restrictions based on the gaps you want covered. For example, say you rent a 25-foot boat but your umbrella policy only covers boats up to 20 feet in length. You won’t be covered for any injury or damages so make sure you read through the whole policy!

Do not assume your umbrella policy will cover everything

Take a look at what gaps you may have in your insurance policies and purchase umbrella coverage accordingly. One gap you may want to consider is the pollution gap. Umbrella coverage for this gap will cover anything sudden or accidental such as your underground fuel tank leaking. However, this gap coverage does not cover seepage so do realize there will always be some limitations.

Do not buy your umbrella policy through a different agent or company

The best way to buy an umbrella policy is through the same agent as your other policies in order to avoid miscommunication between agents, which can result in gaps between policies. If you have special circumstances, your agent will know when to add a special clause or amendment to your umbrella policy to make sure you are covered.

Do not put the price of the policy first

The reason you’re buying an umbrella policy is to cover any gaps in your existing insurance policies. You can’t do that if you buy just a bargain basement umbrella policy without coordinating its coverage, which means you would be taking an unnecessary risk. Talk with your insurance agent to figure out what coverage you need to purchase for your policy and go from there.

Do not neglect to review your umbrella policy annually

Just like all your other insurance policies, you should be reviewing your umbrella policy on a yearly basis. There may be new expenses in your future such as a wedding reception or renting a vacation property where you will need additional liability coverage. By reviewing all your insurance policies you can keep yourself covered in case of any injuries or damages.

Jumping cartoon

Umbrella insurance is useful to have in so many different circumstances. Set up an appointment with your insurance agent to discuss what kind of coverage you need. No one can ever have too much liability coverage so review your current insurance policies and find out what is available.

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Frank DarrasFounding Partner and Disability Lawyer

Frank N. Darras made a decision nearly a quarter century ago that would affect tens of thousands of Americans. Darras took the road less traveled to help the sick, disabled, and elderly mount a heroic fight against billion-dollar insurance compa...

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