Umbrella insurance in Toronto
Every day the newspaper has stories about lawsuits filed for every possible reason. They range from serious injuries resulting from tragic accidents to seemingly silly disputes. If the day comes when you’re served with legal papers, it’s imperative that you have insurance to cover your legal liability.
That’s where a personal liability umbrella policy can help you. Umbrella policies, as they’re also known, supplement the liability coverage you already have through your home and auto insurance and provide an extra layer of protection. They aren’t just for the wealthy — they’re for anyone who has assets that might be at risk if they are responsible for a serious accident.
If you don’t have enough liability coverage to resolve a claim or a lawsuit, the person bringing the action might go after your home or your other assets to pay for damage. Umbrella policies cover damage claims that you, your dependents, or even your pets may cause.
How it works
Umbrella policies kick in after the liability insurance in your homeowners and auto policy runs out. For example, if you have a home insurance policy with liability coverage of $1,000,000, the umbrella policy will pay claims above that amount up to the limit selected.
Umbrella policies aren’t limited to just your homeowners policy. For example, if your liability limit on your auto insurance policy is $250,000 of bodily injury protection per person and $500,000 per accident, your umbrella coverage would kick in after you have exhausted your auto liability coverage.
Most of the risk is assumed under the primary auto or home policy, which is why personal liability umbrella is so inexpensive.
More than your average liability coverage
When you buy a personal liability umbrella, you’re getting more than just higher liability limits. You’re also buying broader coverage in case you’re sued. The insurer selling the umbrella policy agrees to cover you if you cause bodily injury, property damage, or personal injury.
The personal injury protection offers coverage not found in your auto and homeowners policy without an extra endorsement. Generally, personal injury encompasses false arrest, false imprisonment, malicious prosecution, defamation, invasion of privacy, wrongful entry, or eviction. Most primary policies cover bodily injury and property damage, but not personal injury. Certain umbrella policies also provide coverage if you face liability arising from your service on the board of a civic, charitable, or religious organization.
Protection against claims and lawsuits does more than simply pay for the damages. Even if a lawsuit is frivolous, you still face the expense of defending yourself. Your liability coverage pays for lawyer fees and defense costs, which can quickly add up.
Even umbrellas aren’t waterproof
Even if you buy the top-of-the-line personal liability umbrella policy, you can’t protect yourself against every possible claim or lawsuit. There will be exclusions in the umbrella policy, just as there are exclusions in every insurance policy.
Typically, the umbrella won’t cover claims arising out of a business endeavor. If you own a business — even a small one — you’ll need to buy a business insurance policy to be covered against liability claims.
Depending on the law in your state, the umbrella policy won’t necessarily pay for punitive damages, either. These damages, above and beyond any actual monetary losses, are awarded to punish wrongdoers for their conduct and may not be covered by any insurance policy. Also, as a general rule, the umbrella policy won’t cover intentional acts, unless there are extenuating circumstances.
Do I need an umbrella policy?
As with any type of insurance, you don’t want to buy unnecessary coverage. We can help by analyzing your risk of being sued and the assets you have at risk.
Perhaps your family has a swimming pool, trampoline, or swing in the backyard that pose a danger. If you have frequent visitors to your property, there’s a risk of accidental falls. Maybe you’re a golfer who narrowly misses hitting someone during every round.
On the other hand, your personal situation may make lawsuits extremely unlikely. Maybe you don’t own a breed of dog that’s a threat to anyone, unless it manages to lick someone to death.
In any event, at a time when million-dollar verdicts aren’t uncommon, umbrella policies are worth considering.