What is Umbrella insurance? Umbrella Insurance is an additional liability protection that kicks in when the limit of your liability coverage on the existing home insurance policy is reached. It can easily happen, given potentially enormous 3rd party liability and legal costs. Sometimes a home insurance policy can already include umbrella insurance and you should check your policy or with your insurance provider to be certain.
Umbrella insurance also provides protection when your existing policies are not covering particular cases, for example:
- Injuries and treatment expenses of the 3rd party that you are responsible for (e.g. you hit somebody while on a skiing vacation)
- 3rd party property damages that you are responsible for (e.g. your knocked over a table with an expensive china set on it)
- Legal defense costs
- Libel
- Vandalism
- Slander
- Invasion of privacy, etc.
Given the low cost of an umbrella policy (under $100/year), it is highly recommended to have this protection. You should understand, however, what cases are not covered by umbrella insurance policies. For example, if you hit somebody while skiing on your vacation, your umbrella insurance will cover it, but if the same accident happened when you were professionally competing in a downhill ski race, your umbrella insurance will not help you. As a competitive athlete you would need a special insurance, in this case extreme sport insurance.
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