Umbrella and Lawsuits | Shelter Insurance®

What You May Not Know About Umbrella Insurance

Most of us have cars and live somewhere. That means we need auto insurance and homeowners or renters insurance. You might even have life insurance, which is a smart move for any stage of your life. You’re probably familiar with some or all of those things, but you might not be as familiar with umbrella insurance.

One aspect of umbrella insurance is that provides a measure of extra measure of coverage when your policy limits aren’t enough to cover damages from an accident. For example, if your policy limits in an at-fault accident are $100,000 but damages exceed $100,000, you will be expected to come up with the difference. If you have an umbrella policy, you may be covered for the difference. That’s only one example of the coverage the policy provides.

Surprising Coverage
Here’s the really surprising thing most people don’t know about umbrella insurance: It can provide coverage for you and the members of your household if you are held liable for personal injury to others, bodily injury, property damage, defamation, landlord liability and false imprisonment. Here are some examples*:

  • Your teenage daughter leaves a rude comment alleging wrongdoing by a classmate on social media and the classmate’s parents decide to sue you.
  • A business decides to sues you defamation after you leave a negative, untrue review online.
  • A visitor to your home sues you for the cost of their medical bills when they trip on a child’s toy left on your porch steps.

Besides paying any damages you might be liable for (up to policy limits), umbrella insurance can also cover your legal fees tied to the lawsuit. So if a judge orders you to pay $1 million in damages, and your policy limit is $1 million, your umbrella policy can cover the $1 million judgement and your legal fees. It’s important to note that a retained limit might apply. A retained limit is similar to a deductible. It’s the amount you agree to pay before your policy pays.

Personal lawsuits can be upsetting and embarrassing. Although an umbrella policy won’t prevent personal lawsuits, it can certainly help mitigate damage to your personal finances. It’s a wise use of your insurance budget that you hope you’ll never need to use.


*These situations are generalized to illustrate common scenarios where umbrella insurance may be used. Actual coverage for any situation can only be determined by its particular facts.

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