As a responsible adult, you likely have several types of insurance policies in place to protect yourself, your loved ones, and your assets. You likely have homeowners or renters insurance, car insurance, and maybe even a life insurance policy. But have you considered a personal umbrella insurance policy?
In this blog, we'll explore what a personal umbrella insurance policy is, what it covers, and why you might need it. By the end of this article, you'll have a better understanding of whether a personal umbrella insurance policy is right for you.
What is a Personal Umbrella Policy?
A personal umbrella policy is a separate policy that sits above a number of policies you could hold including automobile, motorcycle, recreational, property, or watercraft. An umbrella policy offers additional protection that goes beyond the limits stated in the primary policy, and also covers a wider range of losses that may not be included in the original policy's terms. It's designed to kick in when liability limits are exhausted on your primary insurance policies. If you are involved in a liability lawsuit, a personal umbrella policy can help to cover several expenses, including legal defence fees, attorney fees, monetary judgments, and settlements, medical bills such as therapy costs, lost wages for those who are injured, and international coverage.
The coverage provided by a personal umbrella policy insures bodily injury and property damage arising out of your personal activities anywhere in the world. It can also provide protection where your primary policy might have a coverage exclusion. It can cover not just the policyholder, but also other members of the policyholder’s family or household.
What Else Can An Umbrella Policy Cover?
- Lawsuits related to slander or libel refer to cases in which you are sued for damages resulting from statements or written material that you made. This is the drop-down feature of the umbrella policy, as lawsuits related to slander or libel are excluded from your property policy and the umbrella becomes the primary policy.
- Liability coverage for Directors and Officers of non-profit organizations
- Malicious prosecution - where you are sued for initiating a lawsuit against someone without proper legal grounds or with malicious intent.
Claims That Fall Under Personal Umbrella Insurance
- Personal and bodily injury – including medical bills, loss of income, pain, and suffering damages.
How Umbrella Insurance Can Help Protect You
Here are some examples of incidents where an umbrella policy could provide you coverage:
- You’re at fault in a car accident that injures another driver. Your regular car insurance may cover the driver up to your selected limit, but that limit is not enough to cover the other driver’s medical bills. If the other driver’s injuries are severe, you may be legally responsible for damages beyond your selected insurance limit.
- Your teenager throws a party while you’re out of town. Someone brings alcohol to the party and one of the guests is arrested for driving under the influence and you are sued.
- Your dog runs out of the house and attacks your neighbour who was on a walk. Your neighbour then sues you to cover their medical bills and lost wages.
- Your child posts personal information about a classmate online, causing the classmate to experience bullying at school. The classmate’s family sues you for damages, including the child’s mental anguish.
- You’re a frequent traveller and are involved in an incident while you’re abroad. An umbrella policy is a great travel companion!
An Umbrella Policy Does Not Cover the Following:
- Injury to the insured: This includes injuries or damages to your own home, car, or property. It only covers injury or damage to others.
- Intentional Acts: If you harm or injure someone intentionally (not including self-defence), the resulting claim will not be covered by a personal umbrella policy.
- Business actions: This type of policy doesn’t cover you in business, even if you’re the business owner. Instead, business liability policies exist for this purpose. You would need to purchase a separate umbrella for your commercial business.
Who Needs Personal Umbrella Insurance In Ontario?
Personal liability insurance is something many people already have, but personal umbrella insurance is not necessarily a priority for everyone. Personal umbrella insurance could be an invaluable investment if you value financial protection in costly liability cases. If you are a landlord, engage in “high-risk” activities, scenarios where you need enhanced liability, or if you have a potential hazard on your property that could be the site of a catastrophic injury, umbrella insurance may be a fit for your needs.
Considering that the size of court awards has increased and lawsuits are more frequent than ever; your primary policy limits may not be enough, particularly if you partake in the following:
- Volunteer or sit on a not-for-profit board
- Travel outside of Canada (worldwide coverage)
- Own property in the USA
- Own a home, rental property, or cottage
- Own a pet
- Own a boat or jet ski
- Own a dirt bike or ATV
- Drive a car
- Host parties
- Employ household staff
- Own a trampoline
- Own a pool or hot tub
- If you have an annual household income in excess of $200,000
- Employ household staff
- Have a teenage driver in your house
We recommend contacting your Ontario insurance broker to find out if personal umbrella insurance is suitable for you.
How Much Umbrella Coverage Do You Need?
Umbrella insurance policies usually start at $1 million in coverage, but insurance companies do offer these policies in higher amounts. Although $1 million may seem like a lot of coverage, liability totals can add up quickly. Your Ontario insurance broker can assist you in determining what the right amount of coverage is for your policy.
In conclusion, a personal umbrella insurance policy is a smart investment for anyone looking to protect their assets and financial future. While no one wants to think about accidents or lawsuits, they can happen to anyone at any time. With a personal umbrella insurance policy, you can rest easy knowing that you have an extra layer of protection in case the unexpected occurs.
Your insurance broker will be able to advise you and help you choose the right policy, allowing you to have peace of mind knowing that you and your family are protected from the unexpected.
Contact your Ontario insurance broker today to find out if a personal umbrella policy is right for you.
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Disclaimer: The information provided on this blog is for educational purposes only and is not intended as professional insurance advice. The coverage, terms, and conditions of each insurance policy are unique and subject to individual circumstances. The information provided does not guarantee the availability or suitability of any insurance policy for your specific needs. You should not rely on the information in the blog as an alternative to professional advice from your insurance broker or insurance company. If you have any specific questions about any insurance matter, please consult a licensed insurance broker for personalized advice and guidance.