Insurance and Finance

Concerned About Liability? Try Umbrella Insurance

By Casey Kelly-Barton 3.12.18

Like umbrellas, umbrella insurance can be inexpensive and useful — and when you need one, you really, really need it.

Why might I need umbrella insurance?

An umbrella policy is a liability policy that provides an extra layer of protection over your existing auto, homeowners, or watercraft policy, or your farm and ranch policies, Texas Farm Bureau Insurance Agent Mike Antkowiak says.

Each umbrella insurance policy is linked to another specific policy and takes effect once the other policy’s limits are exhausted. So, if your auto policy’s bodily injury liability coverage is $300,000 and you’re sued for $1 million after an accident, a $1 million umbrella policy would contribute $700,000 to pay the judgment if you lose the suit.

When can I file an umbrella policy claim?

Antkowiak says the automobile is probably the largest liability exposure we have — but it’s not the only situation where an umbrella policy is helpful. If your kids injure a friend while they’re playing, or if a guest falls in your home and gets hurt, umbrella coverage can kick in after your homeowners liability limits are exhausted.

An umbrella policy can protect you away from home, too. If you accidentally injure someone with your cart at the grocery store, for example, your umbrella policy extends the liability coverage limits of your homeowners policy in case of a judgment or settlement.

What doesn’t an umbrella policy do?

Umbrella policies can provide a lot of liability protection — anywhere from $1 million to $10 million or more — but they’re not a catchall coverage solution. They do not cover exclusions that are in your existing homeowners or auto policies; so if you don’t have flood insurance, your umbrella policy won’t cover losses from flood damage.

“Just remember an umbrella policy does not cover everything, and that is why you need to review your policy with your Agent,” Antkowiak says.

Who needs an umbrella policy?

In general, Antkowiak recommends adding umbrella coverage or increasing the liability coverage on your existing policies when your net worth, including your home, reaches about $500,000, so that you don’t have to liquidate your assets if you’re ever sued.

He also suggests umbrella coverage for families with new drivers, because “auto accidents are a big liability risk, and your net worth could be wiped out in a minute.”

The good news, Antkowiak says, is that umbrella policies aren’t as expensive as most people think; so peace of mind and asset protection that fits your family’s budget are never out of reach.

Want to learn more about protecting your home and investments? Talk to your local Texas Farm Bureau Insurance Agent about your umbrella policy options.

Coverage and discounts are subject to policy terms and qualifications and may vary by situation. © 2018 Texas Farm Bureau Insurance