The Mighty Texas Personal Umbrella Policy


A better understanding of the personal umbrella policy here in Texas.

Monday, August 28, 2006

Texas Personal Umbrella Policy, What is it?

Now a day, the word lawsuit scares most of us, and quite frankly it should. We expect that our homeowners or auto insurance to protect us in the event of a liability lawsuit. When suddenly there is an unfortunate event where we realize that there is not enough coverage. So if you are getting sued like a millionaire, doesn't mean that you have to be one. Do you want to have every thing you own and accumulated all your life to be gone with just one strike from the judge’s gavel?

Personal umbrella policies are liability insurance contracts that pay a third party because of damage and injury caused by you. Generally speaking the personal umbrella policy coverage “stacks” on top of underlying policies. These policies include:

  • Auto
  • Homeowners
  • Boat
  • Condo
  • Renters
  • Mobile homes

The bigger and most well known companies offer the personal umbrella policy, commonly known as a PUP. Please be advised that you cannot go to an insurance company and say, "Yes, I would like a PUP" without having some of the policies mentioned previously above. Every company is different but coverage extends from $1 million dollars to $5 millions dollars. Personal Umbrella Policies are very inexpensive and start out at a minimum of $200 a year. I am pretty sure that the math is quite obvious. The coverage of the PUP does not kick in until the underlying policies’ liability limits have been exhausted.

So let me leave you with this analogy to help better understand what the Texas personal umbrella policy does for someone:

It might not happen here in Texas, but it's a horrible rainy day and to prevent from getting soaked, you wear your rain boots, raincoat, and an umbrella. As it pours down even more you become concerned that your rain gear might not be enough to keep you dry. In the distance you notice an umbrella the size of a two-story building. As a precautionary decision you walk over and stand under this huge umbrella and you feel comfortable and content that the chances of your getting wet has decreased significantly. So there you are under this huge umbrella, still under your own personal umbrella, with your raincoat, and rain boots. With this much coverage you are sure that not one drop can fall on your clothes, and that people is coverage.

One thing that I should mention is that NOT everyone needs a personal umbrella policy.