Published: June 2015
Q: I'm a renter. Do I need a personal umbrella policy (PUP)?
A: The fact that you don't own a home won't stop someone from suing you after an accident or other unexpected event — and PUPs are designed to help protect you against liability claims. In fact, one of the most important reasons to have a PUP may be protecting your income from being garnished if you're found liable for damages, says Michael Angles, an Allstate agency owner in Chantilly, Virginia.
This policy sits on top of (thus the term "umbrella") your auto or property insurance policy, providing liability protection beyond the limits of your regular policies.
For instance, suppose you are found at fault for a car accident that injures another driver who sues you for the cost of their high medical bills. If you're found liable and your insurance is insufficient to cover a judgment against you, the court may look to your personal assets or garnish a portion of your wages or business income, explains Angles.
However, if you have a PUP, to satisfy the judgment this policy may help cover court and legal expenses as well as a judgment against you — up to the limit of your policy. Coverage typically runs between $1 million and $5 million, says Angles.
Insurers typically require you to have a renters or auto policy with certain liability limits before you can purchase a PUP. In the case of a covered incident, your auto or property liability policy may help protect you up to its stated limits. When that coverage is exhausted, the PUP can help pick up additional liability expenses, up to the limits of that policy.
Obvious candidates are people with personal assets to protect — and folks with hobbies like boating or hunting that may pose risks. "If there's a reasonable chance you could injure another person or damage their property with your hobby, you should strongly consider a PUP," says Angles.
But really, almost anyone may benefit from a PUP, including those who would find it challenging to get by on a portion of their income if their wages were garnished to satisfy a judgment.
"I have a PUP myself, and I would never be without it. It's a small price to pay for the additional protection," Angles says. "Even if I weren't a homeowner, I'd absolutely have a PUP. I tell my clients, 'OK, so you're a renter. Does that mean you have nothing to protect, or lose, because of a chance lawsuit? If not, get covered.'"
From renters to homeowners, PUPs can help protect a wide range of people. Your agent can answer specific questions about a policy and help you determine if one is right for you.