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Rainy-Day Coverage

How an umbrella policy can protect you from the unexpected. 

No one ever plans to get sued, but accidents happen and things go wrong all the time. In today’s litigious society, a slip, a crash or even a careless comment may lead to a personal liability lawsuit, targeting you for medical expenses, legal fees and damages. Most auto and homeowner’s policies include some personal liability coverage; but the costs associated with a lawsuit can quickly exceed that amount. When that happens, your home, savings and assets are fair game and could be seized.

You can protect yourself against liability lawsuits—and financial ruin—by adding umbrella insurance to your existing insurance policy. Umbrella insurance is additional personal liability coverage that can protect you and your assets if you are ever sued. It provides an extra layer of protection, along with peace of mind.

How does umbrella insurance work?

Umbrella insurance, sometimes referred to as a personal excess liability policy, is designed to protect you from major claims and lawsuits. Umbrella insurance kicks in when you reach the limit on the liability coverage in your homeowner’s, renter’s or auto policy. It covers you if you are sued and need to pay legal fees, or if you are found liable and need to pay damages of any kind.

Umbrella PolicyUmbrella policies vary, but generally include:

  • Bodily injury coverage, which provides coverage for claims or lawsuits arising out of an injury that is determined to be your responsibility.
  • Property damage coverage, which protects you if you are at fault for any damage to another person’s property, including their home or vehicle.
  • Medical payments for medical costs (ambulance, emergency room fees or doctor visits) not covered by other insurance.

Because umbrella insurance goes into effect only after underlying coverage is exhausted, you may be required to carry a certain amount of underlying coverage before you can purchase additional umbrella coverage; this could be as much as $250,000 liability coverage on your primary homeowner’s policy.

Umbrella PoliciesWho needs umbrella insurance?

You might consider umbrella insurance if you:

  • Have a swimming pool. Each year, more than 500 Canadians die from water-related incidents, according to the Canadian Red Cross. Children four years and younger are among those most at risk, and most of these children drown in swimming pools. Swimming pools present a serious liability risk, and your homeowner’s insurance alone will likely not be enough to protect you in the event of a lawsuit resulting from a drowning.
  • Have snowmobiles or ATVs. ATVs, in particular, are associated with a high risk of injury. Even if you let only family and friends ride your vehicle, you are at risk of being sued if someone is injured or causes damage to someone else’s property.
  • Serve as voluntary board member. Even when doing good, you are at risk for being sued. Volunteer board members can be held liable for the actions (or inaction) of the not-for-profit organizations they serve. Your personal insurance is typically not enough to shield you from executive risks. If you join an organization that is unincorporated or are unsure about its level of coverage, you may need to seek an additional policy. See HUB Professional Liability white paper. See HUB Professional Liability white paper.
  • Are a blogger or frequently write online reviews. Bloggers and online reviewers are increasingly being sued for defamation. Unfortunately, homeowner’s and renter’s insurance does not cover libel (written or published defamation) or slander (spoken defamation). If you blog or frequently post comments or reviews, umbrella coverage can protect you should your words cause offense.
  • Are recently retired or living on a fixed income. You’ve worked hard and now may have a comfortable, but limited, amount of resources. One major claim could deplete everything, and throw your retirement and future into uncertainty.

How to buy umbrella insurance

If you want to insulate yourself from lawsuits and protect your home, savings and future, talk to your HUB representative about purchasing umbrella insurance. You can buy umbrella insurance ranging from $1 million to $10 million (and beyond) for a modest monthly fee, which may be a small price to pay for the rainy day security it can provide.