Umbrella insurance: Do you need it?

Our top priority here at PEMCO is to free our communities to worry less and live more. However, it’s important to keep in mind that accidents can happen to anyone at any time. If you’re found liable for a large sum of money, it can exhaust the limits of your existing insurance policies. That's where umbrella insurance could help. It’s as simple as that! 

It provides an extra layer of protection beyond your basic coverage, giving you peace of mind and financial security, truly allowing you to worry less. 

What is umbrella insurance? 

Umbrella insurance is a type of liability insurance that provides additional coverage beyond your primary insurance policies, such as auto, home, and boat insurance. It is designed to protect you from large, unexpected financial losses that can result from lawsuits and other legal claims. Umbrella insurance is a way to safeguard your assets and future earnings from being wiped out in the event of a catastrophic accident. 

What does umbrella insurance cover? 

Umbrella insurance covers you in the event that you are found liable for damages that exceed the limits of your primary insurance policies. It provides coverage for a wide range of incidents, including bodily injury, property damage, libel, slander, and defamation. Umbrella insurance can also cover some claims expenses and defense costs associated with a lawsuit. 

Here are some examples of situations where umbrella insurance could come in handy: 

• Your dog bites someone, and they require extensive medical treatment. 

• You are responsible for a car accident that results in multiple injuries and property damage. 

• A visitor to your home falls and sustains serious injuries and you are found liable. 

• You accidentally injure someone while participating in a recreational activity, such as skiing or boating. 

• You are sued for libel or slander. 

In all these situations, your primary insurance policies may not be enough to cover the full cost of damages and legal fees. Umbrella insurance could provide additional coverage in these scenarios, giving you the protection you need. 

How much umbrella insurance do I need? 

The amount of umbrella insurance you need depends on several factors, including your assets, income, and potential risk factors. Here are some guidelines to help you determine how much coverage you may need: 

1. Calculate your net worth. Your net worth includes all your assets, such as your home, savings, investments, and retirement accounts, minus your liabilities, such as your mortgage, credit card debt, and loans. Your umbrella insurance coverage should be equal to or greater than your net worth (future earnings should also be considered). 

2. Consider your potential risk factors. If you engage in high-risk activities, such as owning a pool or a trampoline, or if you have higher exposure to risk (such as having a teen driver), you may be at a higher risk of being sued. In these cases, you may want to consider higher levels of umbrella insurance coverage. 

3. Evaluate your primary insurance policies. In most cases, your umbrella insurance policy will kick in once your primary insurance policies have reached their limits. Be sure to review your existing policies to determine how much coverage you have and whether it is adequate for your needs. 

In general, umbrella insurance policies start at $1 million in coverage. PEMCO policies go up to $5 million. The cost of umbrella insurance varies depending on several factors, including the amount of coverage you need, your risk factors, and your insurance provider. 

Umbrella insurance is a smart way to protect your assets and future earnings from the unexpected. You never know what life may throw at you. By understanding what umbrella insurance is, what it covers, and how much you need, you can make an informed decision about the right choice for you. PEMCO is here to help you make that decision. 

If you have any questions about umbrella insurance or would like a review of your current policies, you can call us at 1-800-GOPEMCO or visit us at pemco.com.