What is umbrella insurance and what does it do?

Umbrellas or PCL’s (Personal Catastrophe Liability)

What is umbrella insurance? What exactly does it do? Glad you asked!

Most people are pretty familiar with the liability coverage on their auto insurance policy. If you cause damage to someone else with a motorized vehicle, you are at fault and considered liable for the damages. Your insurance company pays for the damage up to the limits afforded by your policy. Pretty simple.

Well, your homeowner’s policy or even a renter’s policy offers liability protection too! In fact, any situation that doesn’t involve an auto, boat or any motorized vehicle, would be covered under your homeowner’s policy. If your dog bites someone or you hit someone with a golf ball on the course, you can be sued for damages. Many people don’t realize their insurance covers liability, not just property.

But, what happens when the damages you cause exceed the limits you have on either policy? You are still liable for the damages after all. This leaves you at risk of losing your home, assets, and future wages. An umbrella is the answer!

Excess liability protection

An umbrella is simply extra liability protection– usually in amounts of $1 or $2 million. This is in ADDITION to your current limits. The name “umbrella” comes from the fact it offers protection in addition to your home and auto. So, if either underlying home or auto liability limits are exhausted, then the umbrella kicks in with an extra $1 or $2 million in protection!

Umbrellas are extremely affordable depending on the underlying risks, so they’re definitely worth checking out!

Hopefully you realize the importance of knowing what you have at risk and how to protect it!

We have created a risk calculator on our website for you to determine if you need an umbrella policy.

The risk calculator is on our Resources page here.

To discuss umbrellas in more depth or have questions about your current situation, please contact us and we’ll be happy to help!