While your home and auto insurance may provide a sense of security, the unpredictability of liability claims in personal lawsuits is a different story.  Medical expenses can escalate rapidly, and the subjective nature of pain and suffering means you could easily surpass the coverage limit of your home or auto policy, leaving you to cover the difference. 

A New Hampshire Umbrella policy can help provide an extra layer of protection. 

How Does a New Hampshire Umbrella Insurance Protect My Assets?

An umbrella policy typically serves as excess coverage for your home, auto, boat, or any other recreational vehicle on which you have purchased personal insurance.

All insurance policies have limits. With many home and auto policies having a maximum liability limit of $500,000, assuming you purchased this limit, this may not be enough coverage. If you are found legally liable for an accident, your home or auto policy will pay up to the policy limit and then walk away once those limits are exhausted. You could then be required to pay the remainder out of your pocket. If you have a New Hampshire umbrella insurance policy, you could have an additional $1 million or more in liability protection.

What are some umbrella claim examples?

Multi-car accidents

Driving in the New Hampshire winter, you glance down at your phone and do not see the car in front of you stop. As a result, you crash into them, causing a multi-car accident with multiple injuries. Because you are found at fault, you are then held legally liable for the damages to the other vehicles and for the medical expenses, loss of income, and pain and suffering of the passengers. Your auto policy pays the policy limits, but not all damages claimed by the other vehicle's occupants have been settled.  In this situation, an umbrella policy could kick in and pay up to its policy limit, providing an additional $1 million to $5 million of extra coverage, depending on the limit purchased.

Backyard injuries:

If you own a swing set, swimming pool, or fire pit, your chances of being sued increase. If a child comes over to play and is injured in your backyard, you may be found liable and be required to pay medical costs and other fees. An injury such as a broken spine can cause lifelong disability, which your homeowner's insurance may not be able to cover entirely. With umbrella liability coverage, your legal fees and settlements could be covered, reducing out-of-pocket charges.

Rental properties:

If you own a rental property, it is strongly suggested that you purchase an umbrella policy because you now have more risk.

The largest risk you face is that you are no longer in control of who comes and goes from your rental property. You could now be held responsible for the actions of your tenant. For example, your tenant has a family party, and a guest brings their dog, which bites another guest. If a lawsuit is filed, you would likely be included in the suit as the property owner.

Another example could be that a FedEx driver fell on your tenant's icy stairs, as you or the property manager could not get out to clear it.  The list could go on and on.

Moreover, umbrella policies may provide coverage for incidents that may not be included in your standard property insurance. For example, if you are accused of defamation or invasion of privacy by a tenant, an umbrella policy can offer protection in these scenarios.

The unexpected:

It is impossible to predict every situation you may encounter.  For example, you may find it hard to believe that your beloved pet could not only bite someone but cause hundreds of thousands of dollars in injuries or that your teenager would throw a party that quickly gets out of hand with injuries and damage to others' property. However, families are forced to face these situations regularly. An umbrella policy helps protect your assets against such situations, providing up to $5 million worth of liability coverage.

Legal Fees:

A considerable benefit of an umbrella policy is not just the peace of mind of additional coverage, but also that the insurance company pays for your legal defense should you have a covered liability suit brought against you. Umbrella policies can cover legal fees and other costs associated with personal lawsuits. Legal expenses can quickly add up. An umbrella policy can help cover these costs.

Do I Need Other Insurance if I Have an Umbrella Policy?

As agents, we have been asked to reduce the liability coverage someone has on their auto or home insurance to the minimum or remove it entirely, as they believe the umbrella policy provides enough protection. The oversight in this assumption is that umbrella insurance companies require minimum liability limits to be purchased on the underlying policies. The minimum limits are frequently $250,000 per person, $500,000 per accident on a personal auto, boat, or recreational vehicle, and $500,000 in liability coverage for any residence owned. If you choose to reduce or remove the coverage below what is required in the contract, you have essentially given yourself a huge deductible.

For example, you have a $1 million personal umbrella policy. You have a car insurance policy with Bodily Injury (BI) coverage at $100,000 per person and $300,000 per accident, but the umbrella company requires BI at $250,000 per person and $500,000 per accident. So if you have a severe accident and are sued for $750,000 in BI for one person's injuries, you would be required to pay $150,0000 before the umbrella policy would pay the additional $500,000. Ouch!

Even worse, if you have an umbrella policy and a boat you decided was not worth insuring, you could be in even more financial trouble if involved in a severe accident. Again, the umbrella serves as additional protection over the underlying boat policy.  If there is no underlying boat policy, you would be responsible for whatever limit should have been in place, regardless of whether it was!

It's crucial to understand that these underlying limit requirements can vary by the insurance company and policy. Before making any coverage changes to liability limits, always check with your agent or umbrella carrier. This knowledge will empower you to make informed decisions about your coverage.

Why you need an umbrella policy:

A single accident could be financially devastating for families across NH, despite having insurance coverage. If the damages exceed the limits of your policy, you will be forced to pay the rest out of pocket, even if that means selling your home and draining your savings. Umbrella insurance can help prevent this, extending your coverage beyond the typical limits while remaining affordable. In addition, this insurance can protect you when your other insurance falls short.

For more information about New Hampshire Umbrella insurance, visit the HPM product page.