Why Umbrella Insurance Is Worth It

a person in the rain holding a rainbow umbrella

A rainy day is one thing, but a little rain can turn into a downpour – fast. Aptly named, umbrella insurance is good to have on hand for when an unexpected storm hits. A personal umbrella policy rests above your existing insurance policies to provide extra coverage and protection from life’s rainstorms.

What is Umbrella Insurance Coverage?

An umbrella insurance policy is a supplemental insurance policy, sold in increments of $1 million, that can cover you and members of your household when the liability coverage of your existing insurance policies is used up.

Generally speaking, most insurance policies come with a set amount of personal liability coverage that protects you financially if you are responsible for an accident resulting in injuries or property damage. By having insurance, the insurance company pays for claims up to the dollar amount specified in your policy documents. But once the insurance company has met the pre-determined liability coverage amount, you become responsible for paying remaining claims.

This is when it’s helpful to have umbrella insurance. This additional policy offers increased financial protection, up to the amount of coverage you elect, by paying for claims you’re responsible for once your primary policy limits have been exhausted.

What Does an Umbrella Insurance Policy Cover?

Umbrella policies cover the cost of claims related to your injury and property damage to others, as well as various types of lawsuits. It does not cover your own medical bills or property damage, contractual obligations you’ve made, or if you have intentionally inflicted harm upon someone else or engaged in criminal activity.

Should I Have Umbrella Insurance?

If you are being sued and would be unable to replace your assets or keep your quality of life using your standard homeowners or auto insurance coverages, an umbrella insurance policy could benefit you.

Here are several situations in which this specific type of coverage makes sense:

  • Net worth of $500,000 or more. Some policies max out at $500,000 in personal liability coverage. Umbrella policies, which naturally carry higher limits, can help ensure your belongings – things like your house, vehicles, jewelry, etc. – are untouched if you’re responsible for an accident that incurs several expensive claims.
  • Homeownership. If your backyard oasis contains a pool or trampoline, or if your furry friend happens to bite, the odds of someone being injured on your property increase. An umbrella policy protects you against these types of accidents and any resulting lawsuits.
  • New drivers. Handing your teenager a set of car keys is exciting and terrifying at the same time. When a new driver has a higher risk of being in an accident, umbrella insurance can provide peace of mind.
  • Recreational activities. The last thing you expect when taking your quad out on the trail is an injury, but it doesn’t hurt to be prepared should it happen. An umbrella policy is helpful if you enjoy hobbies like off-roading, hunting, or boating that are considered “risky” and have increased opportunity for unintentional accidents.
  • Volunteerism. Perhaps you volunteer as a soccer coach. Did you know that you could be subject to a lawsuit from your good deed? From player injuries to slander, an umbrella policy can cover associated costs.
  • Rental properties. If you’re a landlord, an umbrella policy can offer long-term savings by expanding your liability coverage in the case of a costly lawsuit with a tenant.
  • Individual risk tolerance. We all differ in what type of safety net makes us feel comfortable. Umbrella insurance protects against the “what ifs” and will benefit you if you’re worried about any financial repercussions stemming from accidental injuries, lawsuits, or property damage.

How Much Umbrella Insurance Do I Need?

This is a highly personal question that depends on many factors. The amount of coverage you may need to prevent financial hardship will vary significantly from that of a friend or neighbor.

Carefully examine your net worth to determine the appropriate value. When in doubt, round up to the nearest million in coverage.

How Much Does Umbrella Insurance Cost?

Because it’s only used when other policies are maxed out, umbrella insurance doesn’t cost as much as you might think. According to Progressive Casualty Insurance Company, a person insuring one house, two cars, and two drivers can expect to pay roughly $400 per year for the first $1 million in coverage. Each $1 million in coverage thereafter is typically an additional $75 per year.

While these averages are helpful to understand, the going rate will vary based on your personal circumstances, where you’re located, and which insurance company you choose to write your policy.

Final Thoughts

Although many people can benefit from an umbrella insurance policy, it’s certainly not for everyone. Standard insurance policies can typically provide enough coverage for renters, people who don’t have many assets, or those with a net worth of less than $500,000.

If you’re looking for guidance or even a free no-obligation quote on how an umbrella policy can protect you or your business, let TwinStar Credit Union help you find the right policy at the right price. We will partner with you to understand your specific situation so you have appropriate coverage that aligns with your goals. Plus, we partner with some of the industry’s most trusted brands to help you find the best deal!

At the end of the day, bad things can happen when we least expect it. Umbrella insurance is meant to be a helpful asset that offers peace of mind and added protection when you need it most.

Learn more about TwinStar Insurance Services, complete our online quote form, or call us at 844.849.3614 today.

Insurance products and services are offered through and underwritten by SELCO Group Inc., dba TwinStar Insurance, which provides insurance services for TwinStar Credit Union as an independent contractor. SELCO Group Inc. is a licensed insurance company domiciled in the State of Oregon. Business conducted with TwinStar Insurance is separate and distinct from any business conducted with TwinStar Credit Union. Products offered through TwinStar Insurance are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the TwinStar Credit Union, and may be subject to risk. Any insurance required as a condition of an extension of credit by TwinStar Credit Union may be purchased from an agent or insurance company of the member’s choice.