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Umbrella insurance is a form of liability insurance that will supplement your basic liability policies, such as your auto, home or renters, and boat insurance policies. An umbrella liability policy covers a much higher limit.
There are 2 types: Individual and business
Purpose of Umbrella Insurance
The main purpose of an umbrella policy:
Is to protect your assets from an unforeseen event, such as a tragic accident in which you are held responsible for damages or bodily injuries. If another party files a lawsuit against you, your umbrella coverage will pay for the damages you're legally responsible for up to the policy limit. The umbrella policy provides additional coverage or “excess liability” above the limits of your basic policies. It can protect you from bodily injury liability claims and property damage liability claims. Umbrella policies also provide a broader form of coverage and can help cover legal fees, false arrest, libel, and slander.
It is used when:
Your umbrella insurance can come into play if you are found liable and need to pay
damages, or if you are sued and need to pay for your legal defense – even if the result is that you are not found to be responsible. An umbrella policy only pays once your basic liability limits have been exhausted or the claim is excluded from the basic liability coverage. The claim will be made against you, the policyholder, on behalf of the wronged party. Then your insurance company may pay the settlement amount up to the limits of your coverage. If the settlement amount exceeds your coverage limits, you are responsible for paying the remaining amount out of pocket.
What are you protecting:
Your car, house, investments and retirement accounts, as well as your normal checking and savings accounts and even future income, are all considered assets. It is important to know that if you are sued for a lot of money and do not have enough liability insurance or an umbrella policy to cover those costs, all of your assets are exposed. People typically choose to buy an umbrella policy because they want to prevent the possibility of financial ruin due to one misstep or unforeseen accident. Umbrella insurance can provide the protection to prevent such an outcome.
Deciding how much to carry
When choosing your coverage limits, consider three things:
The risks you may face. Consider risks as a homeowner or renter, the risk of causing an accident during your work commute, and any potentially dangerous activities you participate in that could put those around you at risk.
The value of your assets. These include properties, possessions, stocks, bonds, savings and retirement funds. The more assets you have to protect, the higher the umbrella policy limit you should consider.
The potential loss of future income. Because liability lawsuits can result in loss of both current assets and future income, even those with few assets to protect may want to consider the long-term ramifications of a serious claim. When you review your future income, consider your earning potential. You do not have many assets now, but if you’re on track for a high paying career, you could be involved in a lawsuit that can target money you haven’t earned yet.
Why a business umbrella policy
When a catastrophic liability loss occurs, an umbrella insurance policy can mean the difference between a business surviving, or not.
The rising costs of lawsuits and judgments are important for today's business owner to consider. Catastrophic liability losses can happen to any business at any time, and a commercial umbrella policy protects you when those losses exceed your basic liability coverage. The time and effort you have taken to build your business are too important for it to disappear after one unforeseen event. Call us at 479-321-3993 to review your coverages to see if you need a commercial umbrella insurance policy.
What you need to know about commercial umbrella insurance
Commercial Umbrella helps you protect your assets by providing liability limits above and beyond your other policies. In some cases, it even broadens your protection. Due to the unpredictable nature of jury award, it is recommended that your business insurance program include this coverage.
What is Excess Liability Coverage?
This coverage provides extra liability limits over an Umbrella policy. This coverage typically follows the terms of the first underlying insurance policy.
Who needs Excess Liability Coverage?
Higher limits may be necessary for businesses with high loss potential, high profile, sizable sales, numerous assets, large auto fleets, worldwide presence, significant public exposure.
Talk to us today about your business operations and we can advise you what kind of liability coverage you need to protect yourself and your company.