For many, it is the go-to accessory for keeping precipitation from messing up their hairstyle or shield them from the sun’s rays. However, the insurance industry uses an umbrella for a wholly different purpose, though within an appropriately named policy.
A personal umbrella policy (PUP) is one that provides coverage in the event that the limit of a primary policy is insufficient; this applies to the liability limits within home, vehicle, and boat insurance policies. It is also sometimes known as an excess liability policy. Though it is not compulsory coverage, it is a useful policy to have for costly claims.
The policies you have in place for your home and car will usually cover damages payable to third parties following an accident in your home or due to your driving. However, this will only be up to a certain amount, as outlined in the policy documents, and will not be exceeded.
If the claimant’s damages exceed the limit of the policy, the policyholder will be personally liable for this amount if they don’t have a PUP. How do you think you’d cope in this situation? Maybe it wouldn’t be so bad if the costs were $1000 over the policy limit. What about $5000? That would sting a bit more. $50,000? That would be a punch to the gut!
When you live in an increasingly litigious society where members of a jury often decide on the amount of any monetary damages, there is the potential for huge monetary sums to be awarded. Imagine you are at fault for a road traffic accident that involves another car that is driven by a renowned surgeon who suffers irreparable damage to their hands. They will lose their livelihood and a limit of $100,000 is unlikely to be sufficient to compensate them. However, it doesn’t necessarily need to be a highly paid person that suffers injury or damage for there to be an extensive award of damages. Consider a situation where a postal worker over a defect on your front path and breaks their kneecap; this would require a considerable amount of surgery and physical therapy, with no guarantee that they would be able to return to their job as normal.
A PUP can give you peace of mind and protect your assets by providing coverage for:
In addition, the policy can also provide coverage for risks that are often excluded from other policies, such as slander or libel.
The limits of indemnity on personal umbrella policies are in million-dollar increments up to $5 million.
Be aware that you cannot have a PUP as a standalone policy, it is essentially supplemental to an existing, primary policy. In view of this, the insurers will require you to have an underlying policy in place before they will offer a quote with a limit of $250,000 on a vehicle policy and $300,000 on a homeowner’s policy.
Call us if you require advice on whether a PUP would prove useful to you at 617-864-2444. Alternatively, complete our online form to get a quote.