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When Minnesota weather turns stormy, we reach for our umbrellas. But what about when life's unexpected events rain down on us? That's where umbrella insurance comes in - providing an extra layer of protection when you need it most.
What is Umbrella Insurance?
Think of umbrella insurance as a safety net that kicks in when your standard insurance policies reach their limits. It's not a replacement for your auto, home, or business insurance - it's additional coverage that extends beyond them.
For example, if you're found liable for damages that exceed your auto insurance policy limit, your umbrella policy steps in to cover the difference up to its own limit. This can protect your savings, your home, and even your future earnings from being seized to pay for damages.
Personal Umbrella Insurance
Let's say you're hosting a backyard barbecue and a guest trips on your patio, suffering a serious injury. Your homeowner's insurance might cover up to $300,000 in liability, but what if the medical bills and lawsuit exceed that amount? Without an umbrella policy, your personal assets could be at risk.
Personal umbrella policies typically provide $1 million to $5 million in additional coverage. That might sound like a lot, but in today's world of rising medical costs and large legal settlements, it's a reasonable safety margin.
The good news? Personal umbrella policies are surprisingly affordable. For most families in the New Ulm area, coverage starts at about $150 to $300 per year for a $1 million policy. That's a small price to pay for significant peace of mind.
Commercial Umbrella Insurance
Business owners face even greater risks. A single accident on your property or involving your company vehicle could result in a lawsuit that threatens everything you've built. Commercial umbrella insurance works similarly to personal coverage but is designed specifically for business risks. It extends the coverage of your general liability, commercial auto, or employer's liability insurance.
Consider this scenario: Your delivery truck causes a multi-vehicle accident, resulting in serious injuries to several people. Your commercial auto policy might have a $1 million limit, but the total damages could easily exceed that amount. A commercial umbrella policy would cover the additional liability up to its limit, protecting your business assets.
How Do Umbrella Policies Work?
Umbrella policies are secondary coverage, which means they only kick in after your primary insurance (home, auto, or business liability) has been exhausted. Here's the typical process:
An incident occurs, and you're found liable for damages.
Your primary insurance pays up to its policy limit.
If the damages exceed that limit, your umbrella policy covers the remainder up to its own limit.
What's Covered by Umbrella Insurance?
Umbrella policies typically cover:
Bodily injury liability (medical bills, pain and suffering, lost wages)
Property damage liability
Legal defense costs (which can be substantial even if you win the case)
Personal injury claims like slander, libel, false arrest, or malicious prosecution
For business owners, commercial umbrella policies may also cover:
Product liability claims
Completed operations claims
What's Not Covered?
While umbrella policies provide broad protection, they don't cover everything. Common exclusions include:
Damage to your own property (that's what your homeowner's or commercial property insurance is for)
Intentional or criminal acts
Certain high-risk activities
Who Needs Umbrella Insurance?
You might benefit from a personal umbrella policy if you:
Own a home
Have significant savings or other assets
Have teenage drivers in your household
Own rental properties
Have a swimming pool, trampoline, or other "attractive nuisances"
Coach youth sports or frequently volunteer
For business owners, consider a commercial umbrella if you:
Have significant business assets to protect
Operate in a high-risk industry
Have employees who drive for business
Interact with customers on your premises
Manufacture or sell products
Peace of Mind in an Unpredictable World
At Preferred Insurance Opportunities, we've seen how important umbrella policies can be for our clients. In today's society, even careful, responsible individuals and businesses could find themselves facing substantial claims.
For a relatively modest cost, umbrella insurance provides protection against worst-case scenarios. It's all about sleeping well at night, knowing that you've taken steps to protect yourself, your family, or your business from extraordinary circumstances.
If you would like to learn more about how umbrella insurance can fit into your protection plan, give me a call. I'd be happy to review your current coverage and help you determine if an umbrella policy makes sense for your situation.
Remember, when life's storms hit, it's always better to have that extra umbrella ready!