Umbrella Liability Insurance

Many people may be surprised to find it is becoming more and more prevalent to see five million or six million dollar lawsuits filed against ordinary people. Here is an example of what can happen. A guest to your home falls down some steps and breaks their neck. Although alcohol is involved the claimant's lawyer alleges the railing and steps were not built to code. The owner of the home is sued for 6 million dollars.

How do you protect your personal financial assets from huge lawsuits?

An umbrella liability policy is coverage that applies over and above the basic liability coverage you presently have on your personal home and auto insurance policies. This excess coverage would go into effect once your underlying policies have been exhausted.

In the case above, if the homeowner had $2,000,000 liability on the home insurance the home policy would pay the first $2,000,000 and the homeowner would have to defend themselves for the balance. However, if they had an umbrella liability policy, that policy would respond for the balance of the claim. Most people buy either three or five million of excess protection although higher limits are available.

Umbrella liability also provides protection for events that are typically excluded from your personal home insurance such as accusations of libel, slander, defamation of character or wrongful eviction by any of your dependant family members. In these cases, an umbrella policy covers all defense and court costs and any judgments up to your policy limit.

Do you need an Umbrella Liability Policy?

The more vehicles, drivers, watercraft and properties you have, the greater your risk for a huge lawsuit. Review the questions below. The more 'yes' answers indicate a greater need for this important coverage.

• Do I frequently travel to the USA?
• Do I own a swimming pool?
• Do I own a cottage?
• Do I own watercraft, ATVs, or snowmobiles?
• Do I have teenagers driving vehicles registered in my name?
• Do I serve on the board of a non-profit organization (e.g. hospital, sports teams, school)?
• Do I have more than $1 million in personal assets?
• Do I or my teenage children entertain guests or have home parties where alcohol is served?

How much does it cost?

Depending on your exposure and how much coverage you need, the premium could be as low as $250 annually. A small price to pay now for what could potentially protect you from a devastating lawsuit in the future.