When you buy homeowners insurance, you will likely have liability coverage. However, even if you carry the most your policy offers, then you still might need more protection. In this case, you might buy an umbrella liability policy. This is versatile coverage that you can use for a variety of household liability claims.
Understanding Homeowners Liability Coverage
Liability insurance comes with homeowners policies because it applies when the policyholder harms someone else. If that person sues you, then liability insurance can help you compensate them.
Policies will usually cover:
- Bodily injuries, such as if someone slips and falls on your property.
- Property damage you cause to someone else’s belongings. Your policy can cover you for damage you do both on and off your property.
- Personal injury claims caused by allegations of libel, slander or related events.
- No-fault medical payments, which can cover third-party medical costs even if the accident was not your fault.
The benefit of liability coverage is that it can cover costs of lawsuits and settlements without a large personal financial loss. It can apply to damage done by you, family members living in the home and even pets.
Still, your policy will contain limits, and it will only pay up to that maximum for liability claims. If you worry that a claim will exceed the limit of your policy, consider buying umbrella coverage.
The Benefits of An Umbrella Policy
Umbrella liability insurance is a policy you buy separate from your homeowners coverage. It provides liability coverage above and beyond the maximum limits of your policy.
For example, your homeowners policy might pay a maximum of $250,000 for liability claims. However, umbrella coverage might pay an additional $1 million (or even higher limits). The policy might even pay for certain liability claims that your standard policy won’t. You will get a higher and more expansive degree of protection for household liabilities.
If you need to file an umbrella claim, you will first file against your homeowners policy. That policy can then compensate you up to its own limits. Still, once you hit those limits, a claim on your umbrella coverage might help you cover the extra costs. Therefore, you and a harmed third party can go your own ways with the assistance provided.
Always talk to your home insurer about whether they offer umbrella liability coverage. Some insurers will require you to buy the maximum liability limits on your homeowners policy before you can qualify. However, the benefit of umbrella coverage is that you can often use it not just for homeowners, but also for auto, RV, boat and other personal insurance policies. You can gain expansive protection for many personal policies by investing in umbrella coverage.