What is an Umbrella Insurance Policy and Why Should I Have One? 

Amid the many risks and perils that may befall individuals, families, businesses and their property, insurance plays a critical role in limiting potential losses and providing peace of mind.

However, while many key components of an insurance portfolio may help policyholders manage financial hardship involving their own belongings and wellness, liability insurance is also necessary.

This is where umbrella insurance policies may emerge as critical investments, helping policyholders limit the financial consequences of being responsible for others’ losses.

How Do Umbrella Insurance Policies Work?

Umbrella insurance policies may come in multiple forms depending on the policyholder’s circumstances and needs. For example, individuals and families may often seek out personal umbrella insurance to provide an extra layer of financial security within their coverage portfolio.

Similarly, commercial enterprises, including businesses and nonprofits, may elect to purchase a commercial umbrella insurance policy, which can provide similar benefits for their companies.

While there may be various types of umbrella insurance, their general purpose remains the same: to add an additional layer of liability coverage should the limits of a policyholder’s other forms of insurance be exhausted.

This can be critical, as insufficient policy limits could mean that without umbrella coverage, a person or business would need to outstanding losses and expenses out of pocket, potentially incurring far-reaching financial consequences.

Real-life Examples of the Importance of Umbrella Insurance

Liability insurance can be purchased and retained through many different insurance products. Fortunately, umbrella insurance can provide multifaceted secondary coverage should you exhaust the limits of various types of policies. Consider how umbrella insurance may play a critical role in the following scenarios:

• A person’s dog is generally covered under the liability coverage component of their homeowners or renters insurance. However, should a dog seriously injure someone, such as a guest, passerby or neighbor, resulting medical expenses and legal costs could be significant.
  In this situation, a personal umbrella insurance policy can limit the policyholder’s out-of-pocket losses if their homeowners liability limits are exhausted.
• Motorists and other insureds, such as spouses and dependents, are often required to carry auto liability coverage. Still, the financial ramifications of a car accident can be significant and may exceed a policy’s limits.
  As such, umbrella insurance may be needed to avoid financial ruin should a policyholder be at fault for an accident that injures others or damages their property.
• Businesses may often be entrusted with the financial assets and tangible property of their clients. This level of responsibility may require commercial umbrella insurance.
  After all, should a company accidentally damage a client’s valuable belongings or provide faulty products or services that lead to significant losses, an umbrella policy can make all the difference.

We’re Here to Help

At M.L. Ruberton Agency, we’ve served families, individuals and businesses for over a century. Our team will draw on this extensive knowledge and experience to help clients gain an in-depth understanding of umbrella insurance and secure optimal coverage. Visit our website or call 609-561-1200 to get started today.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.