Umbrella coverage – Do you need it?

Do you know what umbrella coverage is? Like an umbrella that covers your head to protect you from the rain, an umbrella policy extends insurance coverage over your home, auto(s), watercraft, and recreational vehicles, and it provides an extra layer of liability protection for the policyholder. Theresa Meyer, senior personal lines underwriter, will share some examples on why umbrella coverage is beneficial:

1. Your 16-year-old is driving a vehicle insured on your auto policy when she hits the shoulder of the road and over corrects. This causes her to cross the centerline, striking another vehicle head on. The driver of the other vehicle is seriously injured and incurs extensive medical bills.

2. You pull out from a stop sign and strike a motorcycle. The motorcyclist suffers severe injuries.

3. While driving at night during a rainstorm, you proceed forward on a green light, crossing the intersection. Due to low visibility, you strike a pedestrian in crosswalk. The pedestrian suffers severe injuries.

These scenarios are examples of how quickly medical bills can add up and exceed your auto liability limit. If your auto policy has liability limits of $250,000 per person and $500,000 per occurrence, these limits probably wouldn’t be enough to cover any of these injured persons’ medical bills and you’d be personally responsible for the additional payments. If you purchased umbrella coverage, however, the additional amount that exceeds your underlying auto limits is covered up to your umbrella liability limit.

Another coverage to consider with umbrella coverage is uninsured and underinsured motorist (UM/UIM) coverage. You can purchase or reject UM/UIM under the umbrella portion. Here’s an example of when injuries could reach the umbrella portion.

A driver crosses the centerline and hits your vehicle head on. Your passenger suffers severe injuries. If the other driver who caused the accident only had a bodily injury coverage limit of $25,000, their policy wouldn’t have adequate limits. If your auto policy has UM/UIM coverage, your policy will provide additional coverage. If you rejected UM/UIM coverages under the umbrella portion, only the underlying auto liability limit would be used. In this situation, having higher underlying UM/UIM limits and the option to add additional UM/UIM under the umbrella would provide better coverage.

In addition to providing the extra monetary coverage you may need, umbrella coverage can help reduce your stress during difficult situations like these. That’s why it’s wise to consider adding umbrella coverage to your insurance coverage as added protection. Be sure to talk to your independent agent.

This article is intended for general educational and illustrative purposes only and should not be construed to communicate legal or professional advice. Further, this article is not an offer to sell insurance. Please consult with your licensed insurance agent for specific coverage details and your insurance eligibility. All policies are subject to the terms, conditions, limitations, definitions, and exclusions contained therein.