What Is An Umbrella Insurance Policy And How Can It Help You?
We have all heard of home insurance, car insurance, and life insurance. But what about everything that falls in between? An umbrella policy gets its name because it can protect multiple policies underneath it and save you from dipping into your ‘rainy day’ fund in the event of an unforeseen problem.
An umbrella insurance policy is usually used in addition to home and auto insurance policies but can extend to business policies as well. The main purpose of an umbrella policy is to expand the liability limits of existing insurance to provide extra coverage. Because your underlying policies are designed to handle smaller claims, the extra coverage provided by an umbrella policy is less expensive per dollar of coverage but also provides protections that aren’t commonly available with a standard homeowners or automobile insurance policy.
How does umbrella insurance apply to a real-life situation?
To use auto insurance as an example, a standard policy can cover repair damages caused by an accident or fender bender. However, umbrella insurance will extend your current liability limits for serious injuries. Without the right type of coverage, a bit of bad luck can change your family’s financial future forever.
Umbrella Insurance is designed to provide additional coverage when your current policy’s liability coverage is exhausted. It also covers liabilities that may be excluded from your current home and auto coverage, such as:
- Accidental and unintentional injury to a third party
- Liability from your volunteer activities with schools and other non-profit organizations
- Legal fees related to personal liabilities due to social media and online activity
- Incidents that occur outside of Canada
Benefits of umbrella insurance
- Umbrella insurance not only applies to the policyholder but also other members of their family or household. For example, if you have a young new driver in the family who is found liable for a major accident, an umbrella policy can cover the injured parties’ medical bills.
- It is a cost-effective option and provides additional safeguards against unforeseen circumstances.
Who should purchase umbrella insurance?
The beauty of umbrella insurance is that almost anyone can benefit from it. Whether you are a high net worth individual who has a lot of expensive assets, a person who poses a significant risk of being sued, or a small business owner to guard against potential monetary damages, umbrella insurance can protect you. Other areas of protection could include;
- Frequent Travellers (Canada, US, and Worldwide Coverage)
- High Net-worth Individuals
- Volunteers
- Owners of Rental Properties
- Pet Owners
- Social Media Users
