By Lorie Ham
February 10 is National Umbrella Day, so it seemed like a perfect time to talk about Umbrella insurance, even though that’s not exactly the type of umbrella they mean. Umbrella insurance can help keep you from getting financially soaked this month and beyond.
This type of policy is liability only, according to Jerry Linscheid at Mennonite Insurance. These policies increase the limits of existing/underlying policies. A 2023 article on Investopedia states that it’s the low-cost way to get significant extra liability coverage.
Umbrella insurance provides an additional layer of security to those at risk of being sued for damages to other people’s property or injuries caused to others in an accident. It also protects against libel, vandalism, slander, and invasion of privacy.
“If you have an auto policy with a liability limit of $300,000, and a homeowner policy with a liability limit of $500,000, and an umbrella for $1 million, then your auto liability coverage is now $1.3 million, and your home liability coverage is $1.5 million,” states Jerry Linscheid, as an example. However, the umbrella doesn’t pay until the underlying limits have been paid in a claim. So, you must keep the underlying policies in place as well.
“Coverage is generally the same as the underlying policies,” continues Jerry. “However in some instances, umbrellas can provide coverage even if the underlying policy does not, but that is unusual.”
What doesn’t umbrella insurance cover? According to an article on NerdWallet, it doesn’t cover your own injuries or property damage—you will need other types of insurance for that. It also won’t cover liability related to your business, unless you have a business umbrella policy. Most also won’t cover liability stemming from a breach of a contract, or if you hurt someone deliberately, or commit a crime.
While Investopedia states that there can be benefits to umbrella policies for almost anyone, those who need it most are people who engage in riskier behavior that might injure someone (for example, they have lots of vehicles and lots of drivers), people who have a higher profile, and people who have more assets to protect.
But are they worth the cost of the premium? “Because umbrellas come into play only during large claims where the underlying policy limits have been exhausted, they are rarely needed,” says Jerry. “Therefore, the premium can be as low as $200-$400/year for $1 million in coverage.”
If you would like to know whether or not you should get an umbrella policy, Mennonite Insurance/Mennonite Aid would love to answer your questions. You can call them at (559) 638-2327. You don’t want to get financially “drenched” this year! You can find other ways to celebrate Umbrella Day by checking out this fun article on Holiday Calendar.