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Although many people aren’t familiar with umbrella policies, they can have a serious impact on your liability protection. To better understand them, the Badger Mutual team sat down with Dan MacLeod, an independent agent at Colonial Insurance Agency Inc. in Germantown, WI. Colonial Insurance has worked with Badger Mutual for more than 30 years, specializing in both personal and business insurance. As a member of the Germantown Chamber of Commerce (and an active volunteer with Big Brothers Big Sisters of Metro Milwaukee), Dan offers a unique and personal perspective on the importance of umbrella policies and why it’s smart to consider them as a part of your overall coverage.


Q: What exactly is an umbrella policy?

An umbrella policy is an extra layer of liability protection.  Like an actual umbrella, it extends over your other insurance policies – most commonly your home and auto insurance.  These policies act as your first source of liability protection before the umbrella coverage kicks in.


Q: I already have home and auto insurance – why do I need an umbrella policy?

Umbrella insurance and its additional liability coverage provide peace of mind for your insurance portfolio.

When we insure our homes and vehicles, we have a pretty good idea of the dollar value that those items are worth, and therefore, how much we should insure them for.  However, umbrella policies are typically used when a severe liability claim, usually involving life-altering injury or death, occurs.  The cost of these types of claims can be much harder to predict and often reaches six figures and beyond. When you carry an umbrella policy, you have the luxury of knowing that – even if your claim exceeds your home or auto liability limits – you have at least $1,000,000 of umbrella coverage waiting in reserve.


 Q: Do I still need an umbrella if I don’t own a home? 

Yes.  If you rent or own a condo, there is still the potential for a person to be injured on your property.  A severe injury and rising healthcare costs can quickly use up your basic line of liability on your renters or condo policy.

Q: Can you give me some examples of when my umbrella coverage would come into play?

Definitely.   When I meet with clients, I often use myself in the example.  So, let’s talk auto first:

Imagine that you’re driving home thinking about your long day and the work that needs to be done tomorrow.  Absentmindedly, you drive through a stop sign and hit me. I don’t survive the crash and, suddenly, you’re faced with a tragic accident and lawsuit – after an honest mistake. I’m 30 years old with at least 30 years of earning potential. I have a wife and child at home who are now suffering loss of society and companionship – an insurance term that is defined as destruction of family relationships when one family member dies. The dollar-value associated with that claim and those types of losses is going to start at a minimum of $350,000 and likely end up closer to a multi-million dollar settlement.

Here’s a home example that could happen to just about anyone: it’s a beautiful Sunday afternoon and you invite your neighbors over a BBQ.  They are leaning on the side of your two story deck and the railings give away. Your guests fall and are severely injured, eventually bringing suit for their damages.

The losses in both examples could very quickly go above and beyond your standard home or auto liability limits. Without an umbrella policy, your income and assets would be exposed.

Q: I already pay so much for insurance – how much would this cost?

The average cost is about $125-$200 per year for $1 million in coverage.

The bottom line? Homes and vehicles can be replaced, but a large liability claim can be financially devastating. Umbrella protection can be an invaluable layer of protection for you and your family – the peace of mind is worth the added cost.

"The average cost is about $125-$200 per year for $1 million in coverage."

Are you located in the southeastern Wisconsin area? Contact Dan and the staff at Colonial Insurance Agency to make sure your family is protected.

Contact Dan