Policies known as PUPs (which stands for personal umbrella policy) function basically like an extension of the liability coverage on your other policies — homeowners, auto insurance, and more. After an accident involving you or one of your insured properties, if someone who suffered as a result sues you for damages, you get support after your primary coverage is exhausted. That can make a difference in sustainability in the face of life-changing events.
Umbrella insurance essentials
When home, auto, and other policies fall short, and you’re liable, umbrella insurance gives you that extra protection you need by:
- Increasing liability limits on primary policies
In effect, umbrella insurance extends the payoff value of your primary policy, kicking in when primary support is depleted.
- Covering claims that primary policies exclude
Claims having to do with libel, slander, defamation, or false arrest usually aren’t covered under primary insurance — but are in your umbrella policy.
Why umbrella liability?
As you grow in your career and family life and assets increase, you become an attractive target. At that point, it becomes wise to consider the relatively inexpensive solution of extending your primary coverage.
In extraordinary circumstances, when large bills are on the line, it can make all the difference. When you need it, it pays to be ready.
Sample claim scenarios
What’s interesting about umbrella insurance is that it applies in a lot of everyday circumstances, including the following:
- Serious accidents that require hospitalization
When you’re responsible for accidental injury or damage that brings truly long-term and consequential changes, auto policy liability limits can become a factor.
- Pet encounters with bad results
Let’s say you’ve been going on a neighborhood every day for the past year. But one day there’s a new dog to greet you on the way — and it doesn’t go well. Your shih tzu has a run-in with a terrier and neither backs down. The problem is your new neighbor takes a bad fall and requires surgery. From there, events can take several turns.
- Your swimming pool
You decided to be the best neighbor on the block and invite all the neighborhood kids to come over and swim. Everything goes great until a diving contest gets out of hand. Umbrella insurance can handle costs incurred after the liability limit of the primary policy is met.