The popularity of personal liability insurance policies is growing rapidly in major Canadian cities like Toronto. The reason is simple; over the past several years, Canada has become a much more litigious society. So, if you’re living in a heavily populated city like Toronto, your liability exposure is now significantly greater. The fact is, lawsuits in Canada have become increasingly common over the past several years. In addition, the amounts being awarded have risen dramatically. These days, it’s not uncommon to see decisions for amounts well over $1 million.
It’s impossible to predict when you might get sued after a car accident, or an accident on your property. Furthermore, you can never predict how much money might be awarded to a person if they win the lawsuit. Of course, no one ever expects something like this to happen to them. But the truth is, accidents like this happen in Toronto every day.
So, how can you protect yourself?
Having a personal umbrella liability insurance policy can provide you with peace of mind, and the coverage you need to shield your family and your assets in the event of a lawsuit.
What is umbrella insurance?
An umbrella policy provides extra liability insurance coverage to protect you from claims and lawsuits that are either:
- Not covered by your other insurance policies. (i.e. home insurance, auto insurance, boat insurance, etc.)
- Covered, but amount exceeds the liability limits of your existing policies.
Think of an umbrella policy like a 20 litre gas can you leave in the trunk of your car; obviously you hope you never have to use it, but the one time you run out of gas, you’re definitely glad it’s there! Having umbrella liability insurance provides you with the same extra layer of protection when the limits of your other insurance policies run out.
Who should have umbrella insurance?
The truth is, almost everyone is open to some sort of civil lawsuit—even if you don’t do anything to deserve it. If you own a home, condo, car, or boat, that liability increases dramatically. In order to protect yourself from losing your assets and future earnings, you should definitely consider an umbrella insurance policy. This is especially true if you fit into one or more of these categories:
- Youth sports coaches
- Dog owners
- High net worth
- Board members
- Homeowners with pool
- Homeowners with trampoline
- Recreational athletes
Although many of these things may seem harmless, all of them increase your chances of being involved in some type of lawsuit.
What does umbrella liability insurance cover?
Umbrella insurance protects you from large liability insurance claims or judgments that exceed your normal policy limits. Plus, you’ll get additional coverage for things like libel, slander, vandalism, and invasion of privacy. All of which are not covered by a standard property insurance policy in Ontario.
Here’s a simplified look at how umbrella policies work.
Let’s say you’re in a car accident that results in serious injuries to another driver. As a result, the driver is unable to return to work. Consequently, they sue you for $1.5 million to cover medical bills and lost wages. However, like most Toronto residents, your car insurance liability limit is only $1 million. In this case, your auto insurance policy would respond to cover the first $1 million, and your umbrella insurance policy would cover the additional $500,000.
As you can see, without an umbrella policy you would be stuck trying to pay the balance of the lawsuit yourself.
What if I increase the liability limits on my other insurance policies?
You could, but it would cost more money and provide you with less coverage. You see, umbrella insurance policies extend your personal liability regardless of whether lawsuits arise from an accident that happened behind the wheel, in your home, on vacation, or while you were at your son’s hockey game.
Besides, increasing your liability on your car and home insurance separately is more expensive because you will pay an additional premium on each policy. Plus, you won’t get the added coverage for libel, slander, vandalism, or invasion of privacy that an umbrella policy offers.
The truth is, umbrella policies offer broader coverage for much a better price.
What is not covered?
Although an umbrella is a great way to ramp up your personal liability coverage, even the best policies will not protect you from everything. Here are some examples of a few common things not covered by umbrella liability insurance:
- Your personal property
- Contract disputes
- Criminal acts
- Intentional acts
*Commercial umbrella policies are available to supplement your existing business insurance package.
How much does umbrella insurance cost?
Surprisingly, umbrella insurance does not as much as people think. Umbrella policies will typically offer at least $1 million in additional liability protection, and can range up to $5 million in added protection. Depending on the liability limit you select, you can get a policy for as little as $150 a year.
In all, having an extra layer of coverage to protect yourself, your family, and your assets is a good idea. Obviously, you never expect something devastating to happen, but when it does, you’ll be glad you have the proper coverage in place.
Interested in getting a quote? The best way to get an accurate price on a umbrella liability policy is to contact your broker. It only takes a few minutes to protect your savings, home, and future potential earnings.