Personal Liability Umbrella Policies – Part 2

The following is part 2 of a newsletter I received from Eric Heckman, CFP, ChFC.

What’s Covered?

A typical personal liability umbrella policy provides the following protection, up to the coverage limits specified in the policy:

• Protection for claims of bodily injuries or property damage caused by you, members of your household, or hazards on your property, for which you are found legally liable
• Personal liability coverage for incidents that occur on or off your property
• Additional protection above your basic auto policy for auto-related liabilities
• Protection against non-business-related personal injury claims, such as slander, libel, wrongful eviction, and false arrest
• Legal defense costs for a covered loss, including lawyers’ fees and associated court costs

What’s Not Covered?

Personal liability umbrella insurance typically provides extremely broad coverage.  Furthermore, if something is not expressly excluded from coverage, it is covered.  The following exclusions are common:

• Intentional damage caused by you or a member of your family or household
• Damages arising out of business or professional pursuits
• Liability that you accept under the terms of a contract or agreement
• Liability related to the ownership, maintenance, and use of aircraft, non-traditional watercraft (e.g., jet skis, air boats), and most recreational vehicles
• Damage to property owned, used, or maintained by you (the insured)
• Damage covered under a workers’ compensation policy
• Liability arising as a result of war or insurrection

How Big of an Umbrella?

Determining how much liability coverage you need is not an exact science.  You might think that you need only enough liability insurance to protect your assets, but a large judgment against you could easily wipe out your assets and put your future earnings in jeopardy.

Coverage limits vary, but a typical policy will provide liability coverage worth $1 – $10 million.  Of course, as your coverage limit increases, the premium will also increase.  Your licensed property and casualty insurance agent can help you determine how much coverage you need.

Where Can I Buy?

Almost any insurer who writes auto and home insurance policies will also offer liability umbrella policies.  You many even be eligible for a multi-policy discount if you purchase a PLUP from your current property and casualty insurer.

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