It’s interesting to learn that most people either don’t know what an Umbrella is, or think it covers things that it does not. An Umbrella is additional liability coverage over your existing home and auto policies. Liability being damage that you cause to someone else and are liable for. This does not give you additional coverage for your personal property.

There are 2 kinds of Umbrella’s.
One is called “Form Following”, which means that it follows the underlying home or auto policy and if there is an exclusion on that policy, the same exclusion would also apply on the Umbrella policy. Then there’s a “Gap Fill” or “Drop Down” policy that may give you coverage where the underlying policy excludes it. Obviously, this is a better choice.

Some other differences:
Some cover punitive damages. (Punitive damages: Monetary compensation awarded these can be huge amounts)
Some cover Uninsured/Underinsured Motorist damages. UM/UIM are coverages for you. If someone uninsured (which statics say are about 30% of the drivers on the road) causes you damage, your insurance will step in and pay for your bodily injury and/or property damages. This may also include lost wages, so could be a very important coverage to have.
Some cover international liability.

When does it kick in?
An Umbrella would kick in after your underlying policy limits have been exhausted. So if you have $500,000 in liability coverage on your home owners, and you have a $1,000,000 claim against you, the home owners policy would pay $500,000 and Umbrella would pay the remaining $500,000 (assuming of course it was a cause covered under the policies)

Here are some examples:
Claim scenario 1: The Insured’s 18 year old son was driving the Insured’s car on a short trip to the store with his girlfriend, the Claimant. The car left the roadway and struck a tree. The Insured’s son told the police that a vehicle cut him off, but there were no witnesses and no evidence of any impact with another car. The Claimant has no recollection of the accident.

The Claimant, a 19 year old college student, was hospitalized for over a month with multiple fractures and internal injuries. She was in a wheel chair but is now able to walk with crutches and continues with physical therapy. She has a right drop foot as a result of the injuries. The insured’s personal Umbrella policy paid the policy limits to the Claimant.

Claim scenario 2: Claimant, age 2, was on the Insured’s property with his Grandparents who were there to care for 2 horses owned by the Insureds. The Insured’s were out of town on vacation. The Claimant was kicked by one of the Insured’s horses, taken to the ER, and then taken by life flight to a larger hospital.
The Claimant was given a 5% chance of survival and underwent surgery for a cracked skull (a piece of which was missing) with 30% damage to the right side of his brain.

He survived and is residing in a neighboring state rehab center. A large payment was made under the personal Umbrella policy.

Claim scenario 3: the Insured hosted a party at his home. Among the guests was the Claimant, a family friend who was also the Insured’s financial advisor. The Claimant brought his wife, infant and 2 year old child to the party.

The Insured gave the Claimant a jug of Spring Water for him to use to mix formula for the infant. The 2 years of child also had a drink.

Shortly thereafter, the children became ill. The family left the party, and took the children to the hospital. The hospital requested the water jug, which was found to contain arsenic. An old label was found wrapped around the handle with the words “weed killer” printed on it. The Insured had apparently mixed the solution of weed killer in a jug similar to the ones used for Spring Water and mistakenly gave it to the Claimant

The infant died and the 2 year old child survived after being in critical condition. Personal Umbrella policy limits were paid out.

Claim scenario 4: The Claimant and Insured have been longtime friends, live on the same street, and the Claimant had been to the Insured’s home on many occasions. The Insured lives in a home with a brick patio which had been constructed in the 1960’s. Bricks were replaced one year before the incident. And an area of the patio is bordered by an 18″ retaining wall with a flower bed between the wall and brick patio.

The Insured, Claimant and another Friend met at a club, had a few drinks, and all returned to the Insured’s home where they sat on the patio in lawn chairs and continued drinking. At around 11:00 PM, the Insured went inside to the kitchen. The Friend also entered the house to call a cab. When the Friend went back outside, the Claimant was no longer on the patio. He found the Claimant unconscious on the ground on the other side of the patio retaining wall. The Claimant remembers falling, but doesn’t remember how it happened.

According to the Insured, on other occasions when the Claimant had been at the home, a patio table was in front of the retaining wall. The table had been moved, exposing an area of the wall. The Claimant, age 56, sustained a spinal cord injury which rendered him an incomplete quadriplegic. He underwent surgery and was on a feeding tube for several months. He was able to return home 6 months after the incident, but continues to suffer partial paralysis of his arms and legs. He uses an electric wheelchair to get around his house and requires assistance with some activities of daily living.

The Claimant owned his business and was married 1 month before the incident. His wife now cares for him at home. The settlement to the Claimant was for the Umbrella policy limit.

These are very inexpensive policies! If you don’t have one, please call/email me today. They can be as little as $150 a year for $1,000,000 in coverage. That is cheap insurance! Rates are based on the number of cars, homes, young drivers, and “toys” (boats, Motorcycles etc)