Why umbrella coverage could make sense for you

By HUB SmartCoverage Team on October 12th, 2019

Most people have auto and property insurance, but have you ever heard of personal umbrella coverage?

Let’s define it. A personal umbrella insurance policy is extra liability insurance coverage that goes beyond the limits of the insured's home, auto or watercraft insurance. It provides an additional layer of security to those who are at risk for being sued for damages to other people's property or injuries caused to others in an accident. This protection covers incidents both in and outside of Canada.

So why would such coverage be necessary? Most people think that liability applies only to businesses or high-income earners. But lots of us could be targets for legal recourse going about our every day lives.

Consider for example, a pet owner whose dog bites someone. How about individuals who do volunteer work and something happens while they are acting on behalf of an organization? Then, there’s social media users and liability issues that can stem from posting in the public domain. What about someone that, despite it being illegal, texts and drives resulting in personal injury or property damage?

They have one thing in common. All of them could be vulnerable.

Canadians more litigious

Trends suggest Canadians are becoming more litigious, and court cases are resulting in larger payouts. And while lawsuits don’t directly result in the loss of the things protected by standard personal insurance policies, people could indirectly lose assets if they need to come up with the cost of an unexpected settlement.

If you have children, specific hobbies, do volunteer work, travel frequently, own rental property or use social media you are a candidate for personal umbrella coverage.

You may think your “boring life” protects you from court battles, but here are four examples that demonstrate how umbrella coverage could save the day.

  1. Social Media. Personal umbrella coverage protects against libel, slander and breach of privacy. The level of confidence Internet users feel when posting makes it too easy to broadcast messages to hundreds or thousands of people. All it takes is one person to retaliate; whether it’s the proprietor of a restaurant who receives a defaming review or the parent of a child whose photos are shared.
  2. Teenagers. They’re maturing and finding their independence, they often don’t fully understand the scope and potential impact of their own behaviour. If a dependent is responsible for a damaging action or breach of privacy, the parent may, in fact, be responsible.
  3. Auto Insurance. Mandatory or not, auto accidents are very common. But base policy limits are relatively low considering the potential damages. When someone causes a collision involving multiple vehicles – especially if any victims experience loss of future income or require long-term care – standard coverage gets eaten up quickly.
  4. Hosting events. Small get-togethers involving close friends and family appear low-risk at first. However, unpredictability increases when variables such as alcohol, pets or small children are added to the mix. While we hope loved ones wouldn’t sue, in cases where compensation is needed, the decision to pursue legal action becomes more about necessity.

So, now you’re wondering how much this all costs, right? A personal umbrella policy is often more affordable than increasing liability on each individual base policy, and it protects you and your family more no matter where you are in the world.

Talk to your broker to find out how a personal umbrella policy can better protect you against the unexpected.

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