What a Personal Umbrella Policy Is (and why you need one)
You’ve probably heard of a personal umbrella policy. Or… maybe you haven’t, but that’s okay. That’s what we’re here for.
For the uninitiated, Wikipedia defines an umbrella policy as liability insurance that’s “…in excess of specified other policies and also potentially primary insurance for losses not covered by the other policies”. In plain English, that means it covers what your other policies don’t.
So, why would anyone need an umbrella policy? Shouldn’t your homeowners and auto policies good enough?
Well, yes… to a point, but there’s only so much your homeowners and auto policies can do. Here’s a fun little illustration to demonstrate.
Take an actual umbrella, an object I’m sure we’re all very familiar with here on the humid, rainy gulf coast. When you drive to the supermarket on a rainy day, your car is guaranteed to protect you from getting wet. When you actually arrive at the supermarket, the building is guaranteed to protect you from getting wet as well. You’re all covered, right?
Not exactly. There’s still that pesky trip from the car to the building across a fully-exposed parking lot, made even worse if you couldn’t find a parking spot close to the entrance. No matter how great your car or the building is, you’re gonna get wet. In the insurance business, we have a term for that: a coverage gap.
So what do you do? You whip out your trusty umbrella! Thankfully, you remembered to bring one, so you’ll stay dry even when the car and the supermarket can’t protect you.
Your auto policy can replace your car if it’s wrecked on the highway. Your homeowners policy can help repair your house if it’s damaged in a storm. But what about your reputation, finances and legal fees if someone gets hurt next to your car in your back yard and decides to sue?
It’s going to be a long trek across the parking lot without your umbrella, that’s for sure.
First Baldwin Insurance