Umbrella Insurance Gaps

Life Events

In 2013 there were over 60,000 personal injury cases seen in U.S. courts, each averaging $60,000 in compensation payouts.

Although the trend in personal injury cases is down over 13% since 2009, they remain an everyday occurrence, and a serious risk to drivers, homeowners, and renters. That’s because so many things can lead to a lawsuit:

  • Someone slips down your stairs.
  • You’re at fault in a car accident.
  • A guest suffers an injury in your pool.
  • A neighbor falls off a swing in your backyard.
  • Your dog bites somebody.
  • Someone sues you for libel, slander, invasion of privacy, or defamation.

Not every lawsuit ends in judgments and compensation. However, whether you’re legally liable for damages or not, any legal action taken against you can pose a serious financial risk.

Between medical costs, legal fees, and other compensation, liability costs from a single accident can spiral out of control.

For instance, if you carpool to work and are at fault in an accident, you could be financially responsible for everyone’s injuries in the car (including anyone else injured in the accident). A single incident like that can put your entire future, your financial assets, and even your home at risk.


Where Liability Insurance Comes In

Liability coverage is part of many types of personal insurance policies. Auto, Home, Condo, Landlord, and Renters insurance typically provide it for legal action against the insured. Liability covers damages caused by the insured up to the policies’ limits, and can also cover defense costs (attorneys’ fees and other expenses) on top of the policy limits.

What puts you at risk, though, are the limits of that liability coverage themselves. The liability limits for each of your policies (Home, Auto, Renters, etc.) might not be enough for you.


Extended Liability Limits

For those concerned that there may be gaps in your coverage, and that existing liability limits might not be enough, there is another layer of protection available.

A personal Umbrella insurance policy extends liability limits beyond those available from other policies, like existing Home or Auto insurance. An Umbrella policy can add anywhere from $1 million up to $5 million in liability limits.

In the event of a catastrophic liability judgment or award against you, an Umbrella policy kicks in whenever the limits of the underlying auto, home, or other affected policy are exhausted.

For example, if that carpool accident leads to $1,000,000 in liability claims, but you only have $500,000 in Auto liability coverage, your Umbrella policy would go in effect, covering the remaining $500,000.

An Umbrella policy can also extend your liability limits to fill other coverage gaps:

  • Covering you anywhere in the world. Cause an auto accident in Italy? An Umbrella policy covers liability claims wherever they occur.
  • Covering claims other policies don’t. Your existing Auto, Home, or Renters policy might not cover lawsuits filed against you for libel, slander, or defamation of character, while an Umbrella policy will.

Lawsuits are prevalent in our modern world, and a single incident can have a dramatic effect on your assets, your home, and your future. If you’re concerned that even the highest limits of your existing polices aren’t enough to cover your assets the way you want, consider a personal Umbrella policy.

To fill gaps in your insurance, talk to your insurance agent or provider.

The coverage provided by the Farmers Umbrella Policy is subject to policy terms, conditions and exclusions.


The information contained in this page is provided for general informational purposes only, and is not meant as professional or expert advice. Every attempt is made to ensure accuracy and timeliness, however all content is presented without guarantees.