When you buy homeowners insurance, you will receive numerous benefits within one policy. Some of these benefits will help you repair or replace your dwelling or possessions if they sustain unexpected, unavoidable damage in hazards like a fire, vandalism or severe weather. Still, other benefits, namely your liability insurance, are designed to help you when someone else alleges that you caused them harm, and you are obligated to repay them.

Many people think that property and liability insurance coverage are separate benefits within the confines of homeowners insurance. While this is true, it does not mean that one benefit cannot influence the other. Often, if you have a high-value property, then you usually need more liability insurance. This is because of the effect this excess property value has on the risks present on your property. Sometimes, you should even consider investing in an umbrella liability insurance plan.

Let’s take a closer look at the liabilities associated with living in a high-value home, and how umbrella liability insurance will be there to assist you.

Understanding High-Value Homeowners Insurance

High-value homes don’t have to be thought of as fancy or large homes (I.e. mansions). They might simply be homes where there is significant value attached to both the land and dwelling due to certain features, including construction specifications and location. Under these conditions, it will require a lot of money to repair or replace the home following unexpected property damage.

Under these circumstances, the benefits provided by a standard homeowners insurance policy generally will not provide an appropriate amount of coverage for the high-value homeowner. Rather, a high-value homeowners policy will provide more expansive benefits, which can more effectively protect both the full value of and the unique features within the insured property.

Liability Insurance for High-Value Homeowners

High-value homeowners policies will include substantially higher dwelling coverage limits than the average plan, but they can also include higher liability insurance limits. This is the coverage that will compensate a third party if they sustain an injury while on your property, or if you are at fault for property damage to their belongings.

This is an important benefit to have because if something does go wrong in your home, and someone who was visiting the property does sustain harm, it will help you compensate that person appropriately. For example, if a neighbor falls on your pool deck and sustains a severe injury, they might expect you to pay for their medical bills, lost income and other hardships. Liability insurance will help you do so.

Even if you didn’t intend for an accident to occur in your home, the fact that it happened on your watch might still make you responsible for the injured party’s losses. It is often a question of negligence—whether you did your due diligence to prevent an accident as best you could—that will determine if you must compensate a third party using your liability insurance.

While high-value homeowners policies will have ample liability insurance limits attached, they are not a guarantee that you will have coverage for 100% of the compensation demanded of you in a claims scenario. It is at this point that an umbrella liability insurance plan will come in handy.

Umbrella Insurance for High-Value Homeowners

When someone files a liability claim against your homeowners insurance policy, it is your hope that the amount of their claim will fall below the limit of your benefits. However, if a claim ever does extend beyond the limits of your coverage, then you will face an additional cost burden that you might not be able to cover on your own.

Suppose, for example, that your homeowners policy includes a liability insurance limit of $1 million. However, a neighbor who gets hurt on your property decides to sue you for $1.5 million. At this point, your $1 million worth of liability insurance can assist you, but that still leaves an outstanding cost of $500,000 that you might have to pay on your own.

At this point, umbrella liability insurance can become a very helpful benefit. It will kick in once your policy exceeds the value of your standard plan. So, after your homeowners liability coverage pays its $1 million, your umbrella plan can provide the additional $500,000. Therefore, it will ensure that you aren’t faced with paying that astronomical sum out of your own pocket.

Plus, some umbrella policies can insure you under circumstances where your standard plan won’t. For example, you might find that your standard policy won’t cover accidents occurring in your swimming pool. However, if someone gets hurt in your pool, then you might still need to file a claim against a liability policy to assist them in their recovery. Under the circumstances, your umbrella policy might cover the entirety of this claim.

Regardless of the amount of liability insurance within your homeowners policy, there is always an added benefit to adding umbrella insurance to your personal insurance portfolio. It is generally cost-effective and easy to enroll, and your agent will be there to help you every step of the way.