An umbrella policy may not be the first thing you think of when you head out the door each day, but very often it can keep you safe and dry when circumstances become inclement. What is an umbrella policy? It refers to liability insurance that is in excess of specified other policies and also potentially primary insurance for losses not covered by the other policies.
Personal Umbrella Policy
A Personal Umbrella Policy goes over your Home, Auto, Motorcycle, Motor Home, Boat, ATV, etc. When the underlying limits have been exhausted then the Personal Umbrella policy pays until its limits are exhausted.It does not add coverage for losses not covered by the primary insurance.
Commercial Umbrella Policy
A Commercial Umbrella Policy goes over your Commercial General Liability, Commercial Auto, Worker’s Comp., etc. When the underlying limits have been exhausted then the Commercial Umbrella policy takes over and pays until its limits are exhausted. It does not add coverage for losses not covered by the primary insurance. The owners of rental units would fall under a Commercial Umbrella.
To get either a Personal or Commercial Umbrella policy, you must carry high limits of liability. Liability insurance also provides a defense fund in case you are sued.
Here are examples of the types of coverages provided by an umbrella policy and how they protect you:
Bodily Injury Liability – covers the cost of damages to another person's body. Examples:
- Injuries to other parties due to a serious auto accident where you are at fault
- Harm caused to others as a result of your dog
- Injuries sustained by a guest in your home due to a fall or injuries sustained by a neighbor's child who falls while playing in your yard
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 as a result of an auto accident where you’re at fault
- Damage claims incurred when your pet chews a friend’s antique rug to shreds
- Accidental damage to school property caused by your child
Owners of Rental Units – helps protect against liability that you may face as a landlord. Examples include the cost of liability claims as a result of:
- Someone falling down because of a broken step on your rental property and suing you for damages
- Your tenant's dog biting someone and you being held responsible for the injuries
While an umbrella policy might not be the first thing you think of each day, it could very well be something you wished you ‘had’ thought of if faced with an unexpected situation.