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The Umbrella Insurance Policy: What It Covers and How It Works

Umbrella insurance is essentially a kind of liability insurance. It could be beneficial if you’ve been found liable for insurance claims that surpasses the amount that your existing insurance policies, whether a home or auto insurance here in Rockford, could cover.

It could even cover liability claims that standard insurance plans might not cover, like false imprisonment, slander, and libel. Additionally, this can also include liability coverage even for rental properties. The chances of individuals getting sued and owing another individual money that their insurance plan can’t cover are slim to none.

But if you do find yourself in this particular situation, you might end up losing a ton of money.

What Exactly Does an Umbrella Insurance Plan Cover?

Below are select examples of how an umbrella insurance policy works and what it can cover if your insurance plan isn’t enough:

  • You were in an auto accident that resulted in bodily and property damage to five individuals and their vehicles. Your umbrella insurance plan could cover bills to repair the property damage as well as the medical bills of injured parties if your standard auto insurance plan won’t suffice.
  • Your son gets into a fistfight in school and injures another boy. You get sued. Your umbrella insurance could cover the boy’s medical bills and damages ordered by the court.
  • Your beloved dog gets out of your house and bites an individual who just happens to be walking in front of your home. The injured individual sues you. Your umbrella insurance could cover damages such as pain and suffering, lost wages due to missed work, and hospital bills to the injured party.
  • Your rebellious teen threw a massive party in your home while you’re away. A guest brings alcohol and drugs, and one of the guests gets stopped for DUI while driving home from your teen’s party. A lawsuit is filed against you. You can use an umbrella insurance policy to pay for damages, etc.

How Exactly Does an Umbrella Insurance Policy Work?

happy family sitting on a couch

As you’ve probably noticed from the above scenarios, aside from you, the policyholder, an umbrella insurance policy could likewise cover your family members. This means that if your teen (who has yet to perfect driving) decides to take your car for a spin and runs into an auto accident, he or she will likewise be covered under your umbrella insurance policy.

Likewise, even if an umbrella insurance plan serves as extra coverage for your existing insurance policies, an incident does not necessarily need to involve your vehicle or property for your plan to cover the incident.

You also get worldwide protection, except for vehicles or properties you own under the laws of other countries. You’re likewise covered for invasion of privacy, wrongful entry, and malicious prosecution.

There’s a chance that even the most responsible and cautious people could end up as the “bad guy” in a personal liability claim. And although it’s highly unlikely that this will happen to you, having an umbrella insurance policy, just to be safe, is always a great option to have.

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