When you own a piece of land, you’re responsible for everything that happens on it. Even if there are no buildings, nobody lives there, and you haven’t permitted others to be on your land, you can get sued if someone is injured or their property is damaged while they are there. For this reason, vacant land insurance is crucial. Today, we’ll explore whether your umbrella policy covers your vacant land and what types of additional insurance you might need.
Does an Umbrella Policy Cover Vacant Land?
Standard umbrella insurance might not cover vacant land, but many insurers are happy to add your land to your policy at little to no extra cost. If you use the area for hunting or other high-risk activities, you’ll likely pay more, and some providers might not agree to cover you.
You might be able to negotiate directly with the insurance company, but it’s often easier to go through an agent. They can provide you with quotes and help you compare different umbrella insurance policies, so you’ll find one that covers your vacant land for a reasonable fee.
What Does Umbrella Insurance Cover?
Umbrella insurance is a cheap and convenient way of increasing the coverage limit of your regular liability insurance policy. Most small businesses have a $1 million/ $2 million liability policy, which means that they will receive up to $1 million per incident and $2 million during the lifetime of the policy, which is usually one year.
The average personal injury or property damage lawsuit results in a settlement of $50-100,000, so the $1 million/ $2 million policy covers most incidents. However, some lawsuits are extremely expensive. If someone is seriously hurt or something very expensive is destroyed due to your negligence, you might have to pay more than $1 million. Once your regular insurance policy runs out, umbrella insurance kicks in and covers the rest.
Every year, between 300,000 and 500,000 personal injury lawsuits are filed in the US. If you work in a high-risk industry like medicine, hospitality, or construction, you’ll likely have to deal with at least one lawsuit during your career. People can sue you if they were injured while at your business location, and the injury could have been prevented.
Personal injury lawsuits can be very expensive, especially if the plaintiff can’t go back to work because they have a long-term disability or they need to spend many months at a hospital or rehab facility. You might end up paying hundreds of thousands for their medical bills, loss of income, and pain and suffering. If you believe that your business is at risk of a lawsuit, take out umbrella insurance as well as general liability insurance.
Damage to Property
Most umbrella policies won’t cover damage to your property, but they’ll pay if something happens to another person’s possessions due to your negligence. Property damage is a particular concern for contractors who visit customers at their homes. If workers accidentally damage the house while on the job, the customer can sue their company.
Property damage lawsuits don’t usually exceed the general liability policy limit. Unless you work with high-net-worth individuals whose homes are worth million of dollars, it’s unlikely that you’ll have to pay more than $1 million in damages. Despite this, getting umbrella insurance might be worth it because property damage often goes hand in hand with personal injuries.
Certain Car Accidents
If you have a business vehicle, you’ll need to get commercial auto insurance. Many insurance providers offer several options, but the cheaper policies usually have a coverage limit of $100,000 to $500,000, while the more expensive ones cover you for up to $1 million. This might seem like a lot of money, but it isn’t always enough. After a serious car accident, the other driver might be permanently disabled, so they can no longer earn an income.
They might also need to make adjustments to their home and undergo surgery. In such a situation, you’ll likely be asked to pay more than $1 million in damages. You might also exceed your policy limit if you’re responsible for an accident with several vehicles, and you need to pay for all the other drivers’ property damage and medical bills.
Companies sometimes get sued because they make a false claim or an untrue statement about someone in one of their advertisements. Large businesses like Red Bull and Apple have had to pay eight-figure settlements due to unethical advertising practices in the past.
While smaller companies are unlikely to face such an expensive lawsuit, they might still be sued for libel or slander. This is one of the reasons why almost every business owner needs to get general liability insurance, even if they don’t have a physical location or interact with customers in person. An umbrella policy can top up your existing liability insurance, so you don’t have to worry about false ad lawsuits exceeding your policy limit.
What Doesn’t Umbrella Insurance Cover?
Umbrella insurance doesn’t cover your injuries, damage to your or your business’s property, and your company’s lost income. You’ll need to get separate policies to cover these risks. You also won’t be compensated if you cause damage on purpose or act illegally. Damage caused by war, terrorism, the transmission of disease, and a nuclear explosion is also excluded.
Before you take out a policy, discuss the terms and conditions with your insurance agent. They will let you know whether your umbrella policy extends the coverage limit of your vacant land insurance and under what circumstances you’re covered.
Do I Still Need Vacant Land Insurance?
As discussed, umbrella insurance simply tops up your existing liability insurance. It isn’t meant to replace your primary policy. For this reason, you still need to get separate insurance for your vacant land. Sometimes, purchasing several policies from the same provider is cheaper than using different insurance companies for each. Your agent can help you decide whether you can get vacant land and umbrella insurance in a bundle from the same source.
What About Hunting Land Insurance?
If you use your vacant land for hunting, you’ll need to get a specific insurance policy because using firearms increases your risk significantly. You might not need hunting land insurance if you don’t have any plans to hunt, but you’ve permitted other people to do so on your land. In this case, your insurance company might ask you to sign a waiver that you’re not responsible for any damage. This protects you to some extent, but you can still get sued under certain circumstances.
Is Umbrella Insurance Really Necessary?
If you work in a high-risk industry, and property damage or personal injuries are likely, you might benefit from taking out a policy. You’ll also need umbrella insurance if people frequently visit your vacant land or if there is a chance that a fire or flood on your land will cause damage to neighboring properties. The umbrella policy will reduce your risk and provide you with peace of mind.
How Much Umbrella Insurance Does My Business Need?
The most important factor to consider is the potential cost of a lawsuit. Think about the worst-case scenario. What would happen, and how much would it cost you? How likely is it that your expenses will exceed your general liability insurance policy’s limit? You might also want to consider your current net worth, the value of your business, and your future income, since this is what you stand to lose. Make sure you’re covered for at least this amount.
How Much Will I Pay for Insurance?
Most people and businesses pay less than $1,000 per year for their umbrella insurance. Generally, the first $1 million is the most expensive. According to a survey by ACE Private Risk Services, a $10 million policy might only cost an individual with one home and two cars $999. However, businesses and people with multiple properties or large families will pay more.
On top of this, you’ll need to pay for your base policies. General liability insurance costs around $1,000 per year, and insuring vacant land will set you back $200-300 per year. Although these figures are correct for the majority of people and businesses, several factors might affect your quotes. Insurers will take into consideration your location, whether you’ve previously made a claim, what you do on your land, and your credit history.
Are There Any Requirements?
Almost any business or individual can get umbrella insurance, but only if they already have a liability insurance policy. Many providers specify what kind of base policy needs to be in place. If business owners don’t have vacant land, commercial auto, and general liability insurance, their umbrella insurance might not be valid.
Many insurers can add vacant land to an umbrella insurance policy. However, you’ll still need to get vacant land insurance. The best way to find a suitable policy is to reach out to an insurance agent. Contact us at ISU Armac today, and ask us to send you some quotes. We’ll help you determine which provider offers the best policy for your needs.