Nearest broker: Searching for a broker nearby…
Nearest broker: Sudbury Phone: (705) 523-2030 Penetanguishene Phone: (705) 549-7437 Ottawa Phone: (613) 733-3312 Parry Sound Phone: (705) 746-2441 Orillia Phone: (705) 325-4234 Kemptville Phone: (613) 258-5991 Eganville Phone: (800) 884-1045 Petawawa Phone: (613) 687-4805 Belleville Phone: (800) 361-0941 Winchester Phone: (800) 487-3706 Wellington Phone: (613) 399-3620 Trenton Phone: (877) 455-0299 Prescott Phone: (877) 504-3569 Picton Phone: (888) 475-2776 Peterborough Phone: (800) 958 2270 Perth Phone: (877) 248-1222 Pembroke Phone: (877) 399-3299 Oshawa Phone: (800) 887-7309 North Bay Phone: (705) 475-0001 Napanee Phone: (613) 354-2152 Morrisburg Phone: (800) 806-0746 Midland Phone: (888) 737-6465 Madoc Phone: (613) 473-5266 Kingston Phone: (800) 590-5422 Gananoque Phone: (800) 932-2131 Embrun Phone: (866) 853-4740 Crysler Phone: (888) 292-7098 Courtice Phone: (888) 761-0443 Cornwall Phone: (844) 463-3616 Cobourg Phone: (800) 895-5902 Carleton Place Phone: (888) 237-9517 Brockville Phone: (888) 345-8663 Brighton Phone: (613) 475-1430 Barry’s Bay Phone: (866) 845-2123 Barrie Phone: (705) 726-3350 Bancroft Phone: (800) 994-0036 Arnprior Phone: (800) 668-7337
Get a Quote
Open Menu
a black umbrella

What is Umbrella Insurance?

Umbrella Insurance is a wonderful invention of insurance that very few people know about or understand. This is a shame because much like umbrellas, umbrella insurance is a cheap and practical way to keep you safe from something you don’t want to deal with. Regular umbrellas protect you from water. Umbrella insurance protects you from lawsuits. Now I’m not saying that getting wet while it’s raining is a good thing – but I would care more about getting hit by lawsuits then I would about raindrops. So read on and find out more about this great bit of insurance.

Umbrella Insurance’s Roots

You have to go to the basics of insurance before you can really tackle the use of an umbrella policy. And the basic bit you’ll have to look at is liability insurance.

We’ve covered liability insurance at length repeatedly in this blog, because it is increasingly becoming the coverage people are buying insurance for. Do you really need an insurance policy to replace a windshield when it cracks after being hit with a stone? Probably not. Do you need an insurance policy to pay for legal fees when you get hit with a lawsuit that is demanding $5,000,000 (this has happened several times to McDougall clients)? Absolutely.

Liability insurance is basically there to cover you if you get sued. It also pays with expenses associated with the trial process, including lawyer fees, expert testimony and other legal costs.

If you have a policy with McDougall Insurance, you should know that we view having liability limits of $2,000,000 as a minimum in today’s world (a stark departure from the provincially mandated liability coverage of $200,000). This high figure can cover substantial costs and judgments, but often (like in the case of $5 million suits), it actually isn’t enough to give you the coverage you need.

How an Umbrella Policy Works

This is where umbrella policies come in. Unlike an auto or property policy, which provides liability insurance in addition to what we call “physical coverage” (coverage that protects the physical item, physical coverage would reimburse you if you car gets hit or your home burns down), umbrella policies actually only provide liability coverage.

Instead, they work as a second line of defense for you, extending the natural liability limits on your home, auto, cottage or other policies. This provides you with increased protection from lawsuits (higher limits), without having to pay for an increase on the liability limit for each policy.

Basically think of it this way – you have both a home and and auto policy. Your auto policy has a liability limit of $2,000,000 and your home has $3,000,000. After hearing me mention that we’ve seen claims hitting $5,000,000, you start to think maybe your liability limits are high enough, and so you want to increase your coverage.

One way to do that would be to just flat out increase your auto and home limits to $5,000,000 each. Although simple, this approach tends to be expensive and many insurance companies won’t provide such high liability limits. The other option is to buy an umbrella policy for $3,000,000 which covers both your home and auto policy. The limits on your policy’s stay where they are, but if you ever experience a lawsuit that exceeds the limits, the extra umbrella coverage kicks in.

So using our example, if you got the umbrella policy and got into a car crash that resulted in you being sued for $3,000,000, the first $2,000,000 of the judgement would be paid by your auto liability insurance, while the rest would be picked up by your umbrella policy – keeping you safe even in the face of a massive legal settlement.

The nice thing about umbrella policies is that they can be comparatively cheap – you can drastically increase your limits by $5,000,000 or more, by paying just a few hundred dollars a year. If the worst of the worst ever happens, it will be the smartest investment you ever make.

Think you’re interested in getting an umbrella policy? Talk to us! Give us a call at 1-800-361-0941 or fill out the form below to have one of our representative contact you. We’ve been writing umbrella policies for almost 70 years, and we will do everything in our power to make sure you are protected as effectively and efficiently as possible.

 

No comments found.
Anonymous User

Leave a Reply

Your email address will not be published. Required fields are marked *

You Might Want to Read

Meet the Dougallers: Rebecca Slaughter
Meet the Dougallers is back with Rebecca Slaughter who is part of our new office in Petawawa! We sat her down to find out a...
Welcome Burr Insurance to the Team!
Burr, is it cold in here? Not anymore, we are heating things up with the addition of Burr Insurance to the McDougall Insurance team! Burr...
McDougall Family Fund 2021!
Our McDougall Family Fund is back! Go to our Facebook Page for full details. What is the McDougall Family Fund Contest? This is our 8th...
Request a Free Quote

It’s simple and won’t take long.

Get a Quote800-361-0941

Person standing, looking down at laptop