An Overview of Umbrella Insurance
As a business owner, surely one must contemplate every now and again what might be the consequences of being sued and, if there weren’t enough liability coverage to protect the business, how would it all come to a head? Umbrella insurance can be the answer for being extra confident in being fully protected. Umbrella insurance is basically extra liability coverage that goes beyond the policy limits of one’s standard car or homeowner’s insurance protection. If the existing liability coverage isn’t enough to fully pay out for damages for which the policyholder is at fault, whether from a motor vehicle accident or an injury on one’s property, good umbrella insurance coverage is what can avert potential financial ruin.
How It Operates
Keep in mind that you do not have to be wealthy to enjoy the benefits of umbrella insurance coverage. Owning a home and being the head of a household is often enough to justify having this extra added protection. Not having enough coverage can mean that everything you have worked for is vulnerable to loss. Often, the standard auto or homeowner’s insurance will cover the initial few hundreds of thousands of dollars of loss. The problem is that you are then personally liable for any amount that exceeds the policy limit.
Good umbrella insurance can cover certain perils not protected by one’s existing homeowners’ or auto insurance policies. Examples include:
• Defamation or Slander
• False arrest or imprisonment
• Malicious prosecution
• Infliction of mental anguish
If you are fighting a lawsuit, you can face huge legal expenses. This is true even if you prevail in the lawsuit. However, with a typical umbrella policy, the insurance provider will appoint a legal team on your behalf and will pay for such things as court costs and for lawyer fees too. If you have a judgment against you for a substantial sum, your umbrella coverage will protect you with a payment for any level of judgment that exceeds your standard coverage, (limited to the maximum amount of your umbrella coverage).
Umbrella coverage comes in $1 million increments. Depending on various factors, the first million dollars of umbrella coverage will usually cost around $300 per year. Each additional $1 million of coverage will likely cost another $100 or so.
Speak with an insurance professional for more information on umbrella coverage.