What Liability Claims Require Umbrella Insurance Coverage?

Umbrella insurance coverage expands the liability protection (limits) provided by your primary liability policies. It doesn’t cover your property against damage, but protects you when you’re liable for causing property damage or personal injury to someone else.

You can cover yourself against these liability claims/issues with umbrella insurance coverage:

  1. Legal Defense Costs

    If someone files a liability lawsuit against you, it may take hundreds of thousands of dollars to defend yourself in court. Umbrella insurance can pay any additional lawyer fees that your primary policy couldn’t cover.

  2. Teenage Drivers

    Drivers aged between 16 and 19 are three times more likely to get involved in a car crash. Also, teens account for nearly 10% of death-causing crashes on average. Having a teen driver in your policy increases your liability risk and auto liability insurance premiums. In such cases, you can consider buying umbrella insurance to get additional coverage at an affordable cost rather than paying higher premiums.

  3. Social Host Liability (Intoxicated Party Attendee)

    If your guest injures someone in an accident while driving back home after you served them alcohol at your house party, they could legally pass that liability and associated claims to you if your state has social host liability laws. Your home insurance policy wouldn’t likely cover that cost, but umbrella insurance could.

  4. Dog Bite Liability

    If your dog bites another dog and its owner as you walk it in the neighborhood, you may be liable for the victim’s resulting expenses, such as medical bills, lost wages, and mental trauma. Your homeowners’ policy may not cover these claims, which is where umbrella insurance coverage could kick in.

  5. Homeowners’ Liability

    Umbrella insurance can cover extra liability costs beyond the limits on your homeowners’ liability coverage. Examples of those include:

    • You host a birthday party for your daughter, and one of her friends is injured while playing on the trampoline
    • An old tree in your yard falls over and damages your neighbor’s car
  6. False imprisonment and Defamation

    You can pay your legal defense costs and more with umbrella insurance when you’re accused of:

    • Unlawfully detaining someone
    • Malicious prosecution
    • Slander/libel
    • Wrongful eviction

    The extra liability protection may extend to the cost of repairing your damaged reputation.

  7. Psychological Trauma

    When you’re at fault for injuring someone, you may be on the hook for much more than medical expenses and lost wages. The victim may seek compensation for their pain and suffering (psychological trauma). This claim is one of the costliest, often running into hundreds of thousands or even millions of dollars. Therefore, it can easily exceed your primary policy’s liability limits. Fortunately, the minimum umbrella insurance limit is $1million and can cover the excess pain and suffering claims you’re facing.

  8. Volunteering

    Volunteering for a local charity is noble, but it can expose you to liability claims or lawsuits. An individual you’re helping through a nonprofit may sue you for negligence or inappropriate conduct. Even when the organization you work for is willing to settle the claim, you may need to always protect yourself with options like umbrella insurance. The extra protection can be useful if the aggrieved individual targets you personally.

Often, the limits on your primary liability policies may not provide the full protection you need to enjoy peace of mind every day. You can extend your limits and get more protection with umbrella insurance coverage. Contact our team at CF&P Insurance Brokers today to discuss your specific liability coverage needs!

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