What Is Personal Liability Insurance, Or Umbrella Coverage?

October 16, 2009

By Brian Babcock

The Ontario Court of Appeal recently upheld a jury verdict which assessed damages at over $15 million dollars for a motor vehicle case. After contributory negligence, the judgment was $9.5 million. Most automobile policies provide coverage of $1 million, and often insurers will only offer a maximum of two million. To avoid personal bankruptcy, more coverage is often appropriate.

Some insurers will sell policies to individuals, which extend their coverage limits for personal liability above the limits of either their auto or homeowners policy. Because these policies may cover a wide range of risks, they are sometimes called personal umbrella policies or wrap-around policies. In addition to higher amounts of protection, the wording of the policy tries to remove some of the confusion created by the exclusions in auto or homeowners policies. None of these products however truly covers “all risks” and a buyer needs to get the coverage explained in terms they understand, before buying. It’s too late to understand the coverage after a claim is made.