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What you need to know about umbrella coverage

If you’ve ever heard the term “umbrella coverage,” your first thought might have been weather-related. But in the insurance world, umbrella coverage has nothing to do with actual umbrellas. So, what is umbrella coverage? How does it work? And who should buy an umbrella policy?
What is an umbrella insurance policy?
An umbrella insurance policy allows you to extend your third-party liability coverage beyond the limits in your existing home and auto insurance policies. In addition to providing excess third-party liability coverage, an umbrella policy may also provide additional coverages that aren’t already included in your home or auto insurance policy (e.g., protection in the event of false arrest, slander, or an invasion of your right to privacy).
How does umbrella coverage work?
In the event that you’re sued, you’ll count on your home or auto liability coverage to cover the costs associated with the lawsuit. But lawsuits can be really expensive, and if your liability claim exceeds the limit in your standard home or auto insurance policy, you’ll be responsible for paying the remaining balance — if you don’t have umbrella coverage, that is. If you do have umbrella coverage, your umbrella coverage will come into effect after your standard liability coverage has run out, meaning you won’t have to dip into your own savings (or worse, file for bankruptcy) to cover the balance.
Who should purchase an umbrella policy?
Anyone can benefit from an umbrella policy — it’s impossible to predict an accident that might result in a lawsuit, and lawsuits are becoming more and more expensive. An umbrella policy is a relatively inexpensive way to make sure you have enough liability coverage to protect your financial security. It’s especially important to consider purchasing umbrella coverage if you have expensive assets or investments you want to protect, or if you participate in any activities that could increase your chances of being sued, such as:

  • Renting out property

  • Coaching kids’ sports teams

  • Participating in sports where you could injure others

Can you buy an umbrella policy if you don’t already have liability coverage?
Since umbrella coverage is designed to provide excess liability coverage (above and beyond the coverage in your existing policies), most insurers will require you to buy a regular insurance policy before you can purchase an umbrella policy. In the event that you’re sued, your umbrella policy won’t kick in until the coverage in your other policies runs out.
If you're a current OTIP policyholder, contact us at 1-833-615-9329 to review your existing home or auto insurance policy and discuss umbrella coverage. If you’re not insured with OTIP and are shopping for home or auto insurance, call us at 1-833-494-0085 to get a quote and receive a $20 gift card of your choice!

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