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A PUP or Personal Umbrella Policy is a kind of insurance that provides liability coverage above and beyond your homeowner or car’s policy. Therefore, if your current liability insurance coverage falls short to cover the damages of an incident on your property or maybe an accident you cause, a PUP enters in effect right where your other insurance policy has left off. This type of insurance is instrumental in protecting you when your homeowners or car insurance falls short.
How An Umbrella Policy Works
To better understand the way a PUP works, let’s take a closer look at the following example: If you cause an accident and injure someone in the process, your typical car insurance policy will cover the injured up to the limit you chose when you bought it. For the sake of this example, let’s consider that limit is $200,000. But what if your limit isn’t sufficient to cover the needs of the person you injured?
In fact, if he sustained severe injuries, then he may need benefits that may easily exceed $200,000 which your policy currently covers. Given this situation, it’s reasonable to assume he will sue you, putting your personal assets at stake. While this may be a small amount, imagine what would happen if that person were a well paid professional, such as a surgeon for instance. What if his injuries are so severe that he cannot work for 3 months? Suddenly, you realize you’re being sued for $1 million so he can cover the 3 months he’s unable to work.
Your car policy covers the initial $200,000, yet how are you going to come up with the remaining $800,000? In this case, a PUP can easily cover the remaining amount so that you’re not forced to sell your assets or consider other extreme means just so you can pay the remaining balance. This is an essential policy that can easily protect your personal property, your home and also your bank account.