Personal Liability vs. Umbrella Insurance: What's the Difference?

From your homeowners to your auto policy and everything in between, there is a lot to understand when it comes to insurance. Luckily, your local Farm Bureau agent can help you gain the coverage you need. But with all the insurance terms, phrases and definitions that get used frequently, it can be hard to remember the differences between each one. Two terms that are commonly mixed up are personal liability insurance vs. an umbrella policy. Here’s what you need to know.

What Is Personal Liability Coverage?

As a homeowner, you are responsible not only for the upkeep and maintenance of your home but also what occurs on your property. If an accident takes place on your property (inside or outside of your home) and it results in bodily injury or property damage, you could be required to cover medical bills, legal fees and more if you’re found at fault. Homeowners policies include a certain amount of personal liability coverage.

What Does Personal Liability Insurance Cover?

In general, if you are legally liable for an accident that occurs on or off your property, personal liability can help protect you financially if an individual suffers bodily injury, you incur costs from lawsuits or if there’s property damage. 

As a hypothetical example, let’s say you’re having a barbecue and one of your neighbors trips in a hole in your backyard and breaks their leg. He ends up suing you for medical damages and you’re found liable. Luckily, the personal liability limits within your homeowners policy will provide coverage for the costs of your neighbor’s medical bills, and the policy will provide you with a legal defense against lawsuits.

What Isn’t Covered by Personal Liability?

Personal liability insurance doesn’t cover every situation. For instance, if you’re found at fault for an auto accident it would typically be covered by the liability limits within your auto insurance policy instead. Your homeowners personal liability insurance also won’t cover bodily injury or property damage if it was purposefully caused by you or your family member.

What is Umbrella Insurance?

Once you’ve reached your personal liability limits, an umbrella policy, also known as excess liability insurance, would kick in and cover the additional amount of damages not covered by your homeowners policy. If you don’t have an umbrella policy and you’re assessed damages that are higher than your liability limits, you could be responsible for paying for those costs out of pocket. Think of umbrella coverage as an extra layer or extension of liability protection.

What Does Umbrella Insurance Cover?

Umbrella insurance can be purchased to extend liability coverage in your homeowners or automobile policy to help pay for expenses beyond those covered within your policy’s liability limits.

Don’t Leave Your Future to Chance

Why risk it when you can protect the people and things that matter most in your world? Talk with a Farm Bureau agent today to be sure you have the proper coverage to protect your today, tomorrow and beyond.