You might want to consider buying stand alone umbrella insurance if you require higher liability coverage than the limits provided by your regular auto, home, or other insurance policies. It can be a financial safeguard since it can be hard to predict how much compensation you may have to pay if the court finds you at fault for causing injury or property damage. You can get up to $1 million in insurance coverage, and the annual cost per policy is generally in a reasonable range.
What Is Umbrella Insurance?
Umbrella insurance is additional liability coverage that extends above and beyond the limits of your standard insurance policies. It might be advisable to consider buying it if you are at risk of people suing you for accidental injuries, property damage, or various other unforeseen events. In an increasingly litigious society, it is almost a necessity to protect yourself with this type of insurance cover.
What Is Stand Alone Umbrella Insurance?
Stand alone umbrella insurance, also known as commercial umbrella insurance, is an umbrella policy that provides additional liability limits to your existing auto or home insurance coverage. It is the coverage you generally buy from a different insurance company than your auto or home insurers. Since most major insurers require you to purchase all essential insurance policies from them, they do not offer stand alone umbrella coverage. You cannot buy stand alone umbrella insurance unless you already have home insurance or auto insurance, and it is more affordable than increasing
What Does Stand Alone Umbrella Insurance Cover?
Stand alone umbrella insurance provides liability coverage for various unforeseen events. Here are some examples:
- You are operating your speedboat, are inattentive at the wheel, end up colliding into an expensive yacht, and must pay for damages.
- You have a rental property, a tenant sues you for unsafe living conditions, and you must compensate them.
- You organize a pool party, one of the guests is injured while diving in your swimming pool, and you have to pay for their medical treatment.
- Your house guest breaks an arm by falling down your steep stairway, cannot work for six months, and sues you for lost earnings.
- You make a false statement about someone in a newsletter, it damages their reputation, and they sue you for libel.
- You own one or more dogs, they knock over or bite someone, and you must compensate them for their injuries.
How Stand Alone Umbrella Insurance Works
After the court finds you legally at fault for injuring someone or causing property damage, you must compensate the victim with the amount the court has stipulated. The stand alone umbrella insurance policy will fill the gap between what your existing insurance policies can cover and what you owe.
In the event of a car accident, for example, where you or your dependent family members are at fault, you are legally obliged to compensate the other driver financially for their medical and car repair expenses. If the compensation amount is more than the liability limit of your regular auto insurance, you will have to pay the remainder out of pocket. That could be a financial setback for you. However, with an umbrella insurance policy, the protection you get from liability can safeguard your assets. The insurance will also cover your legal expenses.
What Stand Alone Umbrella Insurance Does Not Cover
Since a stand alone umbrella insurance is a liability policy, it does not provide coverage for the injuries you sustain or the damage to your property. You will have to depend on other insurance coverage for that, such as health insurance or collision insurance. The personal umbrella insurance also does not cover any business-related liability you incur. You will need to buy a commercial umbrella insurance policy to get business or professional coverage. The stand alone umbrella insurance policy also does not cover the following situations:
- You breach a signed contract and get sued by the other party.
- You or your dependent family members deliberately hurt someone or damage a property and must pay compensation.
Most insurance companies will have specific policy exclusions such as discrimination, business, communicable disease, or contractual liability. There are also various conditions that, if not followed, can make the policy void. For example, if you conceal or misrepresent your personal details, or if the policy applies to a specific time period or territory.
Should You Get Stand Alone Umbrella Insurance?
The decision to get stand alone umbrella insurance will depend on your personal circumstances. While this type of coverage was mainly popular with wealthy people in the past, it has increasingly become commonplace with the middle-class in recent years. You might find it necessary for the following reasons:
- You are in the high-income bracket, and your total worth exceeds the aggregate sum of all liability limits for all underlying insurance policies.
- You own one or more rental properties and are legally responsible for maintaining them and ensuring the safety of your tenants.
- You have an active social life and frequently host large parties on your property.
- You have a swimming pool, trampoline, or play equipment on your property, and the neighbor children frequently use these.
- You are financially responsible for one or more teenage drivers.
- You are the sole provider for your family and want to protect your financial assets against all eventualities.
How Much Does Stand Alone Umbrella Insurance Cost?
You can buy stand alone umbrella insurance in increments of $1 million. The annual cost per policy can generally cost a few hundred dollars, and you may get a discount for each additional umbrella insurance coverage you purchase. You can get a more reasonable price if you bundle your umbrella policy with other existing insurance policies.
Even if you are not involved in any activities that could put you at risk of being sued, it might be a good idea to get a stand alone umbrella insurance policy. The price is affordable, and you get coverage for many unforeseen events. That can protect your assets and give you peace of mind.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.
