What does umbrella insurance cover in TN

We live in a very litigious society where million-dollar judgments for bodily injury claims are not uncommon. If you were sued because someone was injured on your property, would you be able to pay out a major settlement? You can have peace of mind with the extra liability protection offered by umbrella insurance.

What Is Umbrella Insurance?

It’s important to understand what liability insurance is in order to understand the concept of umbrella insurance. If you have Tennessee auto insurance, homeowners insurance, renters insurance, or condominium insurance, you also have liability insurance as an essential part of those policies. 

Liability insurance protects you when you or a covered family member causes some type of property damage or physical injury to another person. So your auto liability insurance covers you if you cause a car accident that injures another driver or passenger. And your home liability insurance covers you if someone is injured at your home, or if you or covered family member hurts someone or damages someone’s property (e.g., your child breaks the neighbor’s window with a baseball). 

Liability insurance pays for repairing or replacing damaged property of others. It also pays for medical expenses for injured parties, and it even pays your attorney fees, court costs, and any financial settlements or judgments that you have to pay if you are sued. But both your auto insurance and your home insurance have coverage limits that are specified in the policy. If you’re sued, your policy limits may not be sufficient to cover a large financial settlement. 

Umbrella insurance in Tennessee offers excess liability coverage that kicks in when the limits of an underlying policy — including homeowners insurance, renters insurance, condominium insurance, or auto insurance — have been exhausted. 

What Does Umbrella Insurance Cover in Tennessee?

Tennessee umbrella insurance typically covers the following types of claims for any person that is covered under the primary insurance:

  • Personal injury
  • Advertising injury
  • Property damage liability
  • Slander
  • Libel
  • Defamation of character
  • False arrest, detention, or imprisonment
  • Malicious prosecution
  • Mental anguish

Umbrella policies offer “follow form coverage.” This means that the umbrella policy typically covers what the underlying policy does. What’s more, an umbrella policy may offer expanded coverage, including covering you worldwide. So if you cause a car accident while driving abroad, your Tennessee auto insurance policy might not cover you, but your umbrella policy would. 

Umbrella insurance might also cover a few circumstances that the underlying policy does not, such as claims for libel, slander, and false imprisonment. 

Keep in mind that you must have a certain level of underlying home and auto insurance in order to purchase an umbrella policy. These requirements vary depending on the insurance company, but typical minimum underlying insurance requirements are: 

  • Auto insurance: 
    • Bodily injury liability coverage of $250,000 per person/$500,000 per accident
    • Property damage liability coverage of $100,000 per accident
  • Homeowners insurance:
    • Personal liability coverage of $500,000

Some umbrella insurance providers require you to have your auto and homeowners insurance with them before they will issue you an umbrella policy. 

What Does Umbrella Insurance Not Cover in Tennessee?

Personal umbrella policies in Tennessee cover defense costs, attorney fees, and financial settlements or judgments associated with covered claims that exceed the limits of your underlying auto, home, or boat insurance policies. 

But umbrella policies also exclude coverage in certain circumstances. Some of the most common exclusions are:

  • Damage caused by intentional acts 
  • Punitive damages in judgments against you or restitution you owe if you’re convicted of a crime
  • Damages related to a business
  • Damage to your own property (an umbrella’s purpose is to pay for damage to someone else that you are responsible for) 

Your policy’s exclusions will be described in detail within your policy documents. Talk to your independent insurance agent and read your policy carefully to be sure that you understand when you won’t have coverage under umbrella insurance in Tennessee. 

What Is the Benefit of Having Umbrella Insurance?

An umbrella policy is often thought of as an extra layer of protection in our lawsuit-happy society. You can be sued for any reason, and even if a lawsuit is unfounded, you still have to defend yourself. If you’re forced to pay a financial settlement to someone who has been injured because of you or a family member, your financial well-being could be destroyed. 

Umbrella insurance can offer the financial lifeline you need if you’re faced with a lawsuit. It offers extra liability if the limits on your home and auto insurance are exhausted from a large lawsuit. 

But is umbrella insurance beneficial for everyone? Certain lifestyle factors or activities that you pursue can increase the likelihood of you being the target of a lawsuit. For example, you might be more likely to be sued if you:

  • Own a home
  • Own a rental property
  • Have a trampoline, pool, or hot tub
  • Host large parties
  • Have a teenage driver
  • Own a dog
  • Own a large home

Anyone with significant assets or an obvious “attractive nuisance” (e.g., the pool) should talk to their independent insurance agent about the need for an umbrella policy. 

But remember, anyone can be sued for any reason, and million-dollar awards in personal injury cases are not uncommon. If you have auto insurance with a $350,000 bodily injury liability limit and you caused a car accident that resulted in a serious injury, how would you pay? 

How Much Does Umbrella Insurance Cost in Tennessee?

Premiums for umbrella insurance in Tennessee will vary greatly depending on the amount of coverage you purchase and your personal risk factors. A $1 million umbrella policy costs around $200 to $300 per year, on average, but your premiums may be more or less depending on:

  • The coverage limit and deductible 
  • Your net worth
  • Your claims history
  • Your driving record
  • Your line of work

Insurance companies consider all of these factors and more when determining premiums for Tennessee umbrella insurance. 

How Can an Agent Help Me Purchase Umbrella Insurance in Tennessee?

If you’re shopping for umbrella insurance in Tennessee, working with a local independent insurance agent is your best bet. Independent agents aren’t tied down to one insurance company. They can help you shop around for the best coverage at a price that fits your budget.

What’s more, your independent agent will get to know you and your family and will be there for you at claim time. 

Article Reviewed by | Paul Martin


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