Trevor Campbell, president of Insurance Services Group, writes a monthly article for a local magazine. For April’s edition of Edmonds Living Local, Trevor dives into umbrella coverage - what it is, how it works, and why it matters.

Carrying an umbrella is something we know a lot about in Seattle. While some of us consider it a necessary accessory for the wet weather – those of us in the insurance industry see an ‘umbrella’ as a way to protect our clients, businesses and families every day.   

What is umbrella insurance?

An Umbrella Insurance Policy is a separate policy – really an extra layer of protection - for things a policyholder does that may cause injury to someone else or their property. An umbrella policy responds when a significant claim occurs, providing additional money above the money available in a homeowner or auto insurance policy.

Often times, the most significant claims come from car accidents, dog bites, boating accidents, rental properties, or even slippery driveways. A home or auto insurance policy can generally provide up to $500,000 for damages a policy holder does to someone else. While that may sound like a lot of insurance, the increased costs of medical treatments is very real. It is no longer uncommon to see first day emergency transport, surgeries and treatments totaling hundreds of thousands of dollars.

These costs diminish the protection available within a homeowner or auto policy. In the last few years, my firm has worked with several clients involved in accidents where the coverage available in their auto policy was exhausted and the umbrella policies we provided saved our clients from selling property, homes or retirement assets to pay claims.

How much does umbrella insurance cost?

In most cases, umbrella policies are quite affordable. For as little as $175 dollars a year, an umbrella policy can protect you, your family, and your assets from a number of liability risks.

Umbrella coverage typically ranges from $1 million to $5 million above your other personal liability limits, including your auto or home policies. Insurance companies will usually require your auto policy and/or homeowner’s policy in order to purchase umbrella insurance.

What else can an umbrella do?

While some insurance companies only offer additional amounts of liability on their umbrella policies, other companies provide additional coverage within the umbrella policy, known as ‘Uninsured or Underinsured Motorist Coverage’. 

This coverage helps when you’re involved in an accident where someone else is at fault but does not have adequate insurance to pay for the damages. In this case, your umbrella policy carrier pays the claim as if it were the other parties’ insurance company. 

While bicycle clubs often make recommendations for members to buy this coverage, they are not the only ones in need. Imagine being hit by a driver that has no insurance and you or a family member is critically injured, not working and needing additional care for months or years? This coverage provides up to $1 million in limits for our clients and their family’s at a cost of only about $100 per year!

Working with an independent insurance agent who understands these requirements and has access to multiple carriers is the best way to ensure you are properly protected rain or shine.