Umbrella Insurance Coverage refers to a broad type of liability coverage. Our industry has found it easier to call this insurance ‘umbrella coverage’ rather than referring to it as excess liability coverage. Excess liability is that over and above the insurance provided by a primary policy.
Primary coverage is the coverage for acts for which you are charged with legal responsibility. Primary insurance policies for individuals are such policies as:
Each of these policies provides insurance coverage to pay for an individual’s responsibility. These insurance policies respond in the case of an accident or lawsuit to protect the individual. For example, if you’re involved in a car accident and charged with a violation, you may be responsible to pay for the bodily injury or property damage caused to others. These costs may include legal fees, copying fees, witnesses, and all the materials needed to defend a lawsuit. The problem is that the limits of liability on your policy may not cover all the costs. You could be responsible to pay for anything beyond the limits of liability.
Consider the fact that the recommended liability for car insurance is $100,000 per individual for bodily injury/$300,000 per accident. Property damage liability is usually $50,000 per accident. Rationally consider the costs that can be incurred in a car accident. Medical, hospital, and rehabilitation costs for an individual involved in a car accident may be well over the limits of liability, not including the legal fees and costs.
This is where an umbrella policy’s protection enters into the picture. An excess liability policy adds a layer of protection above the liability coverage of your primary policy. The additional $1,000,000 or $2,000,000 of coverage will help pay for the additional costs incurred in the event of a catastrophic liability loss. In addition, premiums are reasonable. Umbrella policies ordinarily provide coverage above the liability offered. Some additional coverage may be given as part of an umbrella policy. An umbrella policy is a crucial addition to your insurance portfolio.