Everything you’ve worked hard to obtain…the nice home, your financial assets, luxury items, and more…gone. This is the harsh reality of what can happen when homeowners are facing liability issues and could be left paying for the aftermath. Anyone not willing to lose the things and the life they’ve worked for are those who needs umbrella insurance the most.
Do I Need an Umbrella Policy?
Umbrella insurance isn’t required by law in the state of Texas, but having it can help you avoid a variety of financial hurdles and grant you peace of mind knowing you’re protected.
It all comes down to liability and risk tolerance. If you are more likely to get a lawsuit for such matters or if you are a prominent figure with lots of assets, this protection can come in handy. Here are common examples of people who needs personal umbrella insurance:
- Homeowners and those who own property.
- Anyone with large financial assets including your savings.
- Travelers that are less risk-averse and find themselves outside of the U.S. often.
- If you own risky items that could cause a liability lawsuit such as a dog, trampoline, or pool.
- You work in any capacity that could find you liable for another party. For example, the coach of a local baseball team, holding a sport on a local board, etc.
- The same is true if you play sports with the risk of injuring someone else while playing.
- You are a landlord, or public figure, or are known to host parties at your residence.
Liability takes many forms. This includes having to cover the damage done by someone else in your household such as your children. You can even face issues if you are reviewing a local establishment online.
All of these scenarios and more are exactly why it’s so important to have umbrella insurance as a part of your coverage. Home insurance is a powerful tool, but umbrella coverage can help protect you against more through an affordable policy.
How Does Umbrella Insurance Work?
A standard home insurance policy (HO-3) will protect homeowners as will auto insurance protect drivers against liability. There are generally two types of liability: bodily injury and property damage.
But when the damage exceeds the limits of your home and auto coverage, how do you protect yourself? This is exactly where umbrella insurance comes in.
Those who need umbrella insurance will find that their coverage is supplemental coverage built to help them survive extensive losses from larger claims that exceed policy limits.
For example, if you have a liability claim that would be $1 million and policy limits that only reach $500,000, you’ll have to pay for the difference out of pocket.
But if you have umbrella coverage, typically featuring up to $1 million in coverage, the remaining $500,000 would be covered by your umbrella insurance.
Your umbrella coverage acts as a second layer of protection and is a much more affordable option than doubling up on a policy, or in some cases, adding even more to your policy limits.
With that being said, there are stipulations that come along for those who need umbrella insurance, including the following:
You Must Have Another Insurance Policy
Homeowners, drivers, landlords, and renters can all enroll in and benefit from umbrella insurance. However, you’re going to have to have another policy in place before you can enroll in umbrella coverage.
This means that you can’t simply purchase an umbrella policy and call it a day. Your coverage doesn’t even come into play until after you have exhausted the policy limits of other policies, therefore, you’re going to need to have them in place beforehand.
You’re Going To Have To Have a Minimum Amount of Coverage First
In addition to enrolling in a home, auto, renters, and/or landlord policy, you’re also going to have to reach a threshold for a certain amount of policy limits that are added to your coverage before becoming eligible for umbrella insurance. To put it simply, you can’t have the bare minimum coverage and qualify for umbrella insurance.
How Much Does Umbrella Insurance Cost in Texas?
The average umbrella insurance policy will only cost Texans a couple of hundred dollars per year equating to $1 million in coverage. However, your premiums can vary due to a variety of factors including:
- The amount of coverage you are in need of.
- The location of your home.
- The features of your property include any potential attractive nuisances such as swimming pools.
- Your claims history and other personal risk factors.
There are many factors to consider and each carrier will do so, but rates can vary because each carrier will assess these variables differently.
One brand might believe that your swimming pool isn’t as big of a deal as another and your premium will reflect this if you take the time to shop around and view the different premiums you might find.
Overall, you’re going to see higher rates for those in need of more coverage and presenting more risk than those who require less coverage and pose less risk to the carrier.
Risker clients mean more claims and this means a higher premium. If your personal factors aren’t deemed as risky or you don’t require as much coverage, expect to pay less.
In any case, this is exactly why comparing your coverage among top-rated carriers is so important in order to save money. You’ll be able to gain a better picture of what your premiums will be and find the best coverage at the lowest rate before enrolling.
Protecting Your Financial Assets
The entire purpose of umbrella coverage is to protect your finances after a major loss. This is a growing issue, however, with the rising costs associated with liability.
An increase in the cost of living continues to be seen throughout the country and major losses can cause Americans to feel these pains even more. The cost of building materials or restoring property damage is pretty tangible, but there is another cost you must consider: labor.
Legal fees and medical costs continue to be some of the most costly expenses anyone can endure. This means that if you are on the hook for such expenses, your policy limits won’t go nearly as far as they once did.
Furthermore, legal battles can be drawn out and costly in multiple ways. Not only are your finances at risk but so too are other assets and your mental well-being.
Umbrella insurance offers additional protection at an affordable rate for Texans, but your policy’s reimbursement in a time of need can make enrolling a critical decision for anyone looking to maintain their way of life.
Intentional or Criminal Acts Aren’t Covered
It should go without saying, however, liability claims to your umbrella insurance policy have some restrictions. This includes intentional acts or criminal activity conducted by the policyholder or members of their household.
For example, if your child were to find themselves at the center of a situation in which a claim was to be made by accident, you can count on your policy. However, if you or someone in your home is found to be liable while conducting a criminal act, don’t expect your claim to be accepted.
Can You Get Umbrella Insurance if You Don’t Own a Home?
Yes, umbrella insurance can be purchased by non-homeowners, however, you need to remember that you’re still going to need another type of coverage to qualify.
Two prime examples are drivers with auto insurance and renters with renters insurance. Policy limits and having a primary form of insurance are the main qualifiers for anyone who needs umbrella insurance, not homeownership.
How To Know if You Are Who Needs Umbrella Insurance
As great as it is to provide such resources to anyone deciding on purchasing umbrella insurance, the best way to know if you’re someone who really needs an umbrella policy, is to speak with an insurance agent. Here’s why:
- By speaking with an umbrella insurance agent, you’ll gain professional insight from a licensed expert that can help you determine your risk level.
- Painting a better picture with a professional provides you with the opportunity to assess your own protection needs on a personal level.
By taking the time to audit your personal factors with a professional, you can determine the right policies for your financial protection and discuss the level of protection you require.
Remember, the many factors that go into creating your premium are assessed differently by each brand. Looking among these carriers is going to help you find the best price for your coverage. Here at Freedom Insurance Group, our team is ready to help find coverage right for you.
We work with more than 25 top-rated insurance providers that offer umbrella insurance, homeowners insurance, auto coverage, and much more. These financial safety nets allow you to protect yourself from potential losses that can be detrimental when paying for them alone.
So, who needs umbrella insurance? Anyone looking to protect their assets and gain peace of mind for an affordable price. On average, our clients save 40% when switching. Contact us today for a quote or to learn more about your coverage options.