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Atterbury, Kammer & Haag, S.C.
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What Is An Umbrella Policy? 5 Reasons You Need This Coverage


An umbrella policy provides added protection for you in the event other applicable insurance coverage is exhausted.  Umbrella policies may provide coverage in the event you injure someone else or in the event someone injures you.  Typically umbrella policies are sold in $1,000,000 increments, although policies with lesser coverage may be available.  You should check with your insurance agent to determine whether an umbrella policy is right for you and what specific features your policy should have.

Far too often we have been involved in cases involving catastrophic injuries and too little insurance coverage to fully compensate the injured person.  We highly recommend that everyone have an umbrella policy for five key reasons.

1.  You need the protection.  If you are underinsured and you severely injure someone, once
your insurer pays your policy limit, you may have to pay the rest of what is owed out of your own pocket.  Obviously, this can cause financial ruin.  Similarly, if you are injured by another, providing you purchased an appropriate umbrella policy, you may be able to seek compensation from your umbrella policy.  The point is that an umbrella policy can protect you in the event you injure others or in the event you are injured by others.

2.  It is cheap.  Frankly, you can’t afford not to have umbrella coverage.  For several
hundred dollars per year (we are not insurance agents, but we know that prices can vary), you can purchase an umbrella policy.  Would you risk everything you own for a few hundred dollars?  Bear in mind that the policy can protect you if you injure others or if you yourself are injured.  You cannot afford not to have this coverage.

3.  It may provide coverage not provided under your other policies.  The language of an
insurance policy can be technical and subject to more than one interpretation.  We have been involved in circumstances where insurance coverage was excluded under one policy, but allowed under an umbrella policy.  Obviously, we cannot promise an umbrella policy will cover you in every situation.  We hope this article prompts you to ask your insurance agent about precisely what is covered by any given umbrella policy.

4. It helps you keep pace with increasing costs.  For example, we have handled cases
where people thought they were adequately insured, and therefore, had not met with an insurance agent to review their coverage on a regular basis. They did not realize the cost of a trip to the emergency room, physical therapy, or prescriptions.  They are surprised to learn that what may have been adequate coverage ten years ago, no longer is adequate.  The point is that just as the cost of houses, wages, and medical care have increased, so too should your insurance coverage.

5.  It helps protect you (and others) if you have a young driver.  Imagine, your son or
daughter is driving with three friends in your vehicle coming home from soccer practice. He or she runs a stop sign and crashes into another car.  Thankfully, no one was killed. The occupants of the other car sustained non-life threatening injuries.  Their total medical bills are $20,000.  Your son’s passengers suffered broken bones, but all are healing well.  They have a total of $40,000 in medical bills.  Do you still think you have adequate coverage?

The point is that young drivers are often not yet great drivers.  That is why insurance companies often raise your premium when you add a young driver to your policy.  In addition, younger drivers often have others in their vehicle.  A simple mistake could find you and your family responsible for paying money beyond your insurance policy.

What is the solution?  Meet with your insurance agent and buy a sufficient umbrella insurance policy.