A personal umbrella policy is designed to give added liability protection above and beyond the limits on homeowners, auto, and other personal lines insurance policies. This protection is designed to “kick-in” when the liability limits on other current policies have been exhausted. When it comes to your personal liability you need to think in terms of your dog getting loose and biting a neighbor or even better a fender bender that turns for the worse.
In order to qualify for a personal umbrella policy not only must your underlying liability limits must meet the minimum liability requirements of the insurance company but you also must maintain a claim free record. Once you meet these underlying requirements you will be eligible for the coverage.
With an umbrella policy, you can add an additional layer of liability protection in layers of one million. Your umbrella policy should be at least equal to your current net worth. However, if coverage falls short and you are found to be guilty a judge could order you to pay up, liquidating savings and investments (retirement plans and trusts are usually safe), real estate and personal property, possibly even garnishing your wages. You should consider having a limit in place that is equal to the present value of your employment income stream.
One coverage area that is not standard is personal umbrella policy uninsured motorist protection. This important coverage provides additional protection over the uninsured motorist and under-insured motorist coverage provided by your personal auto policy. It will also protect you against damages suffered in an accident caused by a driver with no liability insurance or insufficient liability insurance.
The addition of uninsured motorist and under-insured motorist protection to your personal umbrella usually adds an additional cost but it is well worth the cost considering the statistics of how many uninsured and under-insured motorists there are driving on the road. In 2012 an Insurance Resource Council Study estimates that 9% of Oregon drivers are uninsured. The bottom line is personal umbrella policy uninsured motorist protection is not automatic. Pay the additional premium for this very important coverage. If your insurance carrier does not provide this protection find a carrier that will provide it.