Umbrella insurance protects consumers from financial devastation. It's a common policy homeowners purchase because it protects their home and other assets when an insurance claim exceeds existing homeowners or auto insurance policy limits. However, it can be a smart investment for renters, too.
It Supplements Existing Liability Protection
Typically, basic liability protection only includes $100,000 in coverage. An umbrella policy can offer $1 million or more in additional coverage; see Umbrella Liability Insurance for more information.
It's Inexpensive
For $1 million in liability protection, renters could pay as little as $300 a year. Claude Lilly, Clemson University College of Business and Behavioral Science dean, notes that an additional million may cost only about $100 more. This relatively small investment helps protect a renter's possessions, auto and other assets while providing peace of mind.
It Complements Exposures
The hobbies a renter enjoys can make an umbrella policy a necessity. For example, if a renter's dog bites a contractor or guest, resulting in thousands of dollars in medical expenses and a lawsuit, umbrella coverage can kick in after the basic renter's insurance limits are exhausted and provide the financial protection the renter needs.
Owning a swimming pool, hunting, or playing golf are enjoyable activities but each can lead to costly liability claims. Renters should consider an umbrella policy that covers the specific exposures associated with their hobbies and property.
Consider Net Worth
Each renter should decide how much umbrella insurance to purchase based on current assets and net worth. Choosing coverage that reflects what you own helps protect against judgments that could otherwise threaten your savings and possessions.
Buy Based on Future Earnings
If a renter is found liable in an accident, a judgment could lead to wage garnishment. Purchasing an umbrella policy that takes future earnings into account can help ensure a judgment can be paid without losing significant assets.
Remember Slander, Libel and Privacy Protections
Umbrella coverage often extends beyond accidents and lawsuits to include claims of slander, libel or invasion of privacy. That broader protection makes an umbrella policy a valuable layer of coverage for many renters.
Overall, umbrella insurance provides beneficial coverage for many consumers, including renters. For details on personal policies, see Personal Umbrella Insurance Policy. If you're unsure how much coverage you need, talk to an agent.
Frequently Asked Questions
Do renters need umbrella insurance?
Not always, but renters with significant assets, high future earnings, or activities that increase liability risk should consider it.
How much umbrella coverage should a renter buy?
Coverage should reflect your assets and potential future earnings; many people start with $1 million and adjust from there.
What does umbrella insurance cover beyond a renter's policy?
It typically covers liability amounts that exceed your underlying policy limits and can include broader liability claims like libel or slander.
Will umbrella insurance cover legal defense costs?
Yes, umbrella policies commonly pay for defense costs and judgments up to the policy limit, subject to policy terms and exclusions.