Umbrella Insurance Policies
An interesting form of liability insurance is what is known as “Umbrella Insurance.” Essentially, it is extra coverage above and beyond a typical liability policy limit that is stated on the declarations page of an insurance policy. It provides extra coverage to you and anybody else who is insured under the policy should the liability coverage on the primary liability policy be exhausted. Those other insured individuals will usually be your spouse and members of your family who live with you in your household.
For example, a claim made under your umbrella policy happens if you have $300,000 in bodily injury coverage through your car insurance policy but you are responsible for causing twice that much ($600,000) of personal injury damages to another individual. Your normal car insurance will pick up the first $300,000 but, should you not have umbrella coverage, you'd be stuck with the additional $300,000 out-of-pocket. That is a huge amount to be on the hook for! Because you wish to have your family, you home and all your personal assets covered and protected from exactly this kind of scenario, you should seriously consider purchasing proper umbrella coverage. This coverage will kick in and pay for that extra $300,000 that is beyond your auto insurance bodily injury limits. This is exactly what umbrella insurance is designed to do.
Umbrella coverage provides that extra added protection for your automobile liability and it also normally provides extra coverage for your homeowners’ liability as well. The same kind of extra damages can ensue if, for example, a gutter cleaner slips and falls off your eaves. The umbrella insurance is then triggered if and when the liability limits on your homeowners’ insurance are exceeded.
Depending upon the policy details and your insurer, umbrella insurance can also cover property damage, liability on your owned rental units, a defamation lawsuit, and false arrest, even an intrusion of your privacy or other litigious acts. Please note that you'll need defined threshold coverage from the same insurer to be qualified for umbrella coverage. Most insurers will not offer you umbrella coverage if you're driving with a large amount of liability insurance (like $100,000 of coverage) with yet an additional $100,000 liability on your home as well. This is a game-changer so be aware.
If you do choose to purchase umbrella coverage, keep in mind that it doesn't insure everything. Like practically every liability policy, it usually won’t cover any intentional acts nor will it pay out for punitive damages. For the usual negligence-based liability coverage though, umbrella insurance will properly protect you and your family and your assets as well.
Umbrella insurance is an essentially a form of extra added liability insurance. It's for anything that is beyond normal liability policy limits and it provides additional coverage in case liability coverage on primary policy is exhausted. Those who mostly benefit will most likely be your spouse and family members, all of whom live with you under one roof.
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