What is an Umbrella Insurance Policy?
Umbrella insurance is an insurance that provides protection beyond existing limits and coverage. It provides security to those who are at risk of being sue for damages to other people’s property. Also to injuries caused to others in an accident. In other words, it can provide additional insurance for things like injuries, property damage, certain lawsuits, and personal liability situations. Furthermore, an umbrella insurance policy is very helpful when the insurance owner is sued and the dollar limit of the original policy has been exhausted. The added coverage provided by liability insurance is most useful to individuals who own a lot of assets or very expensive assets and are at a significant risk of being sued.
What does the umbrella insurance cover?
Umbrella insurance provides coverage commonly bodily injury, property damage, and claims that may be part of exclusions by other liability policies including claims like false arrest, libel, slander, and liability coverage on rental units you own.
What does it cover?
Insurance provides coverage for:
Injuries: Bodily injury liability covers the cost of damages to another person’s body. For instance, a guest in your home falls
Damage to property: Property damage liability covers the cost of damage or loss to another person’s tangible property. Examples include the cost associated with damage to vehicles and other property due to an auto accident where you are at fault.
- Slander: An injurious spoken statement
- Libel: An injurious written statement
- False arrest, detention, or imprisonment
- Malicious prosecution
- Shock/mental anguish
What Does It Not Cover?
The following are the ones who will not back you up:
Personal Property: it won’t cover damages that you make to your personal belongings.
Criminal Acts: If you hurt someone on purpose, whether that means injuring them or damaging their property, this insurance won’t cover the injuries you cause or the lawsuit that follows.
Flood Damage: Just like homeowners or renters insurance, umbrella insurance doesn’t cover damages caused by floods. You need a flood insurance policy for that.
Contracted Worker Injuries: If you hire workers through a construction company, they should have their own insurance. Sometimes, however, you sign a contract that makes you responsible for the workers. Read the disclosures carefully. If you sign a contract that makes you liable for the workers, and one of them gets hurt on your property, umbrella insurance will not cover you.
Who needs umbrella insurance?
This insurance is very popular with doctors, lawyers, business executives, journalists, public figures, board members, nonprofit volunteers, and anyone with a high net worth or higher-than-average likelihood of winding up on the wrong end of a lawsuit.