Umbrella Insurance Policies
When purchasing liability insurance, one of the biggest concerns is if there is enough coverage in the unfortunate situation where you might be sued. This is where umbrella insurance becomes so valuable. Learn the basics on umbrella coverage and why it can be so important.
Umbrella insurance is a policy that gives you additional coverage once the liability portion of your regular policy is maxed out. Unlike other types of insurance, an umbrella policy can only be purchased once you’ve already purchased an initial insurance policy for a specific dollar amount. It cannot be purchased on its own, which is why it’s considered extra coverage.
An umbrella policy covers a policy holder who is being sued and doesn’t have sufficient liability insurance on his or her regular policy. Umbrella policies are typically purchased by business owners, although they may also be purchased as supplements to automobile and homeowners insurance policies. An umbrella policy may pay for medical expenses, legal expenses, property damage and more.
It’s important to remember that umbrella coverage is additional coverage above and beyond what is through the initial policy. For instance, a business owner has $50,000 in liability coverage on his business policy and $200,000 on an umbrella policy. A customers slips on the sidewalk, breaks a leg and sues the business owner for $100,000. If the customer wins the lawsuit, the initial policy will only pay the customer up to $50,000, and the additional $50,000 is paid through the umbrella policy.
In addition to paying out settlements for lawsuits, umbrella policies will also pay for personal injuries, property damage, legal expenses and even court costs. In addition, the policy provides protection against false arrest, libel or slander. Landlords of rental units can also get additional liability coverage through umbrella coverage. Basically, anyone who finds they may be at the losing end of a lawsuit due to their liability can purchase an umbrella policy as long as they already have a liability insurance policy.
The major benefit of this type of insurance coverage is that it provides the policyholder with additional coverage beyond what his or her policy would cover, which can mean the difference of a business owner losing or maintaining the business. In most lawsuits, there are large dollar amounts and umbrella policies can make a difference. Another benefit to umbrella policies is that they’re reasonably priced; they’re generally cheaper than original insurance policies.
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