What’s Umbrella Insurance and is this coverage right for you?

If you’re new to the world of insurance, you may be wondering, “What’s Umbrella Insurance? Is it a policy you need for a rainy day?” Pretty close! Like an umbrella can keep you protected from certain elements. Umbrella Insurance for home and auto can help protect you financially from an accident or incident.

An Umbrella policy acts as an extension of your existing home or auto insurance policies. Meaning, if you’re ever faced with a claim or lawsuit that surpasses your liability coverage, Umbrella Insurance can cover you for the remaining amount! Let’s dive further into this insurance product so you can find out if it’s right for you.

What’s umbrella insurance?

When you purchase insurance, a specific amount of liability coverage is included. This amount may not be enough to cover certain situations completely. Umbrella Insurance can help by covering the remaining amount.

Umbrella Insurance is designed to add extra liability coverage in addition to another policy, like your auto, recreational vehicle, personal watercraft, season property or home insurance. The extra coverage applies when the liability limits of the above policies have been reached.

If you’re a business owner, Umbrella Insurance for your business, can also help protect you and your business financially.

You can purchase umbrella insurance to extend your liability coverage for residences and vehicles that you own within Canada. By paying one umbrella premium, you can cover multiple homes or vehicles. It’s generally more affordable to purchase one umbrella policy that’s applied to multiple homes and vehicles, than it would cost to individually increase liability coverage for each item. The amounts you may extend your liability coverage for differs by insurer, so speak to a BrokerLink Insurance Advisor to discuss your options.

Is umbrella insurance right for you?

Liability Insurance can protect you financially from unforeseen incidents, however, this insurance only covers a certain amount. if you have significant assets, you should consider umbrella insurance, as there’s a risk of losing these assets in a large claim or lawsuit.

Let’s look at some possible risks you could face personally, or as a business owner:

• You cause a serious auto or boating accident
• Your dog bites a visitor, neighbour or stranger
• You accidentally drive your car into a building or object
• Your employee files a wrongful termination lawsuit
• Customer information is leaked

Now, what happens if these claims or lawsuits exceed your liability coverage? Umbrella insurance can come to the rescue by covering the remaining amount.

What does an umbrella policy cover?

Umbrella insurance with BrokerLink offers additional coverage in these areas:

• Personal and bodily injury – including medical bills, loss of income, pain and suffering damages.
• Property damage – including damage to someone else’s property, like their vehicle, home and/or landscaping, that was caused by you.
• Landlord liability - including damage to your property, like garages, fences and gates, as well as loss of rental income, legal and medical fees.

Factors to consider for the umbrella coverage you need

Value of your assets

If the value of your assets exceeds the amount of your Liability Insurance, consider covering yourself with umbrella insurance.

Potential future income loss

While you may have a limited income now, think about your future income. For example, if you’re new to your field, you have the potential to move up the ladder and make much more money than an entry level employee.

Risk level of a lawsuit

If you’re a business owner, you face many unique risks. Consider the risk level of your business for a lawsuit that has the potential to hurt you financially.

Umbrella coverage follows you

Umbrella coverage will follow you around the world. For example, if you accidentally start a fire in a hotel room, the umbrella coverage on your home insurance policy can cover you for amounts in excess of your liability coverage.

This same principle will apply to you if you are involved in a car accident while driving a rental car when travelling.

What isn’t covered by an umbrella policy?

Here are some instances where umbrella insurance may not financially protect you:

• Personal property – If your kitchen catches on fire from an attempt at a home cooked meal, the damages to your home may not be covered under Umbrella Insurance, however if the fire spreads to your neighbour’s home and they submit a claim or a lawsuit, your Umbrella policy can help cover these costs.
• Business losses – A personal umbrella policy may not apply to any claims or lawsuits filed against your business. You’ll want to speak to your insurance advisor about umbrella insurance specifically for your business.

Other occasions where an umbrella policy may not cover you include: any participation in criminal or intentional actions, or if you’re found financially responsible for a contract you entered.

Get in touch with an experienced insurance advisor

Adding umbrella insurance to your policy is a great way to be proactive and avoid surprises down the road as it increases liability protection for you and your family.

Contact a BrokerLink insurance advisor to discuss what types of Umbrella coverages are available to protect you from any rainy days ahead!

Give us a call or stop by one of our branches today!

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Umbrella insurance FAQs

How does an umbrella policy work with my current policy?

Umbrella insurance adds extra liability coverage in addition to an existing policy, like your auto or home insurance policy. It can kick in when the liability limits of your policy are reached.

What’s the difference between umbrella insurance and excess liability insurance?

Umbrella insurance can cover costs of a claim or lawsuit that surpasses what is covered under you liability policy, while excess insurance can provide coverage above the limits of the underlying coverage.

How much does business umbrella insurance typically cost in Ontario?

The cost of umbrella insurance depends on the type and size of your business, the risks you may face and the amount of coverage you need. It’s important to speak to an Insurance Advisor to discuss this insurance product, as it can be tailored to your unique business needs.