Published: May 2015
A personal umbrella policy (PUP) that offers liability protection beyond what your auto and homeowners insurance policies cover sounds like a good idea, but does "personal" mean only you are included in the policy's coverage? What about your spouse or your teenager? Are you covered only at home, or are you also protected while away on summer vacation?
According to The Actuarial Foundation, a personal umbrella policy helps protect you (the policy owner) as well as the members of your household in the event that you are found liable for a covered incident. This typically includes your spouse, dependents and any other relatives living with you.
Your personal umbrella policy may not, however, cover someone in your household who has auto or property coverage in their own name or through another insurer. For example, your son may be excluded from your PUP if he has renters insurance on an apartment near his college campus. (He may want to consider his own personal umbrella policy.) Your mom, who lives with you full-time, may not be covered on your policy if she has her own auto insurance policy. Be sure to talk to your agent about any potential exclusions so that you know exactly who is included on your policy.
Coverage from a PUP typically extends beyond incidents at your home, even if you are traveling outside of the country. For example, if your car slides on the ice and causes damage to another vehicle, your PUP will likely cover damage that exceeds your auto policy's limits (within the stated limits of your PUP coverage).
Your umbrella policy may also help provide protection for something not covered by your home or auto policy, says the Actuarial Foundation. For instance, if your husband rents a snowmobile while on a winter getaway, and is involved in an accident that results in property damage and physical injury to another person, your umbrella policy may help pay for the costs or repairs and medical bills of the injured individual, even if you do not have recreational vehicle insurance.
PUP protection may also extend beyond physical damage, providing financial help (within stated limits) if you're sued for libel or slander. So if your teenager's strong opinion about a business on social media results in a lawsuit, an umbrella policy will likely help cover legal fees and, if necessary, pay for fines or damages.
Keep in mind that not everything is covered by a PUP, regardless of whether it is in or out of your home. Your personal belongings and business, even if it is run out of your home, will most likely not be covered. Talk to your agent to be sure exactly who and what your umbrella policy covers, and ask if there is any additional coverage you need to consider.