Umbrella Insurance Coverage

The modern world is full of risks and threats, which is why people rely on insurance to protect their assets. Sometimes, however, homeowners and auto insurance policies are not enough. Umbrella insurance coverage provides an extra level of protection for certain types of liabilities that takes effect when other policies are exhausted. Umbrella insurance coverage gives peace of mind in the face of catastrophic loss or high-cost litigation.

What Is Umbrella Insurance Coverage?

Umbrella insurance is a personal liability policy that provides an added layer of protection on top of existing homeowner, auto, boat, or other insurance policies. Umbrella coverage protects against loss resulting from bodily injury, personal injury, or property damage. It can also provide protection against liabilities not normally covered by home and auto policies such as libel, slander, false arrest, and even protection for rental properties.

How Do Umbrella Policies Work?

Umbrella insurance policies kick in after an existing policy has been exhausted. Consider an auto accident that results in serious injuries. The party found to be at fault will be liable for the medical expenses of the injured party. Beyond the medical bills, the injured party could bring a civil suit seeking damages for lost wages. If the costs are high, a typical auto insurance policy may not be enough to cover everything. Umbrella coverage kicks in once the underlying policy has paid out to its limits. If, for example, the damages amount to $800,000 and the auto insurance policy only provides coverage up to $300,000, an umbrella insurance policy would be used to pay the remaining $500,000, or up to the limit that you set for your umbrella policy.

Who Would Benefit from an Umbrella Insurance Policy?

Umbrella insurance policies can be beneficial for anyone, not just those with high-value assets. Consider the example above of a car accident with costly medical bills. Without an umbrella policy, the expenses in excess of the auto insurance policy would have to be paid from savings, selling a house or other property, or even wage garnishment. Unfortunately, accidents can happen to anyone. But an umbrella insurance policy can help make sure that an accident doesn't cause long-term financial obstacles.

What Protections Are Not Typically Included in Umbrella Policies?

While an umbrella insurance policy can be tailored to provide various types of coverage, there are a number of things typically excluded. Policies are intended to protect against liability arising from damage to another person or their property, but not the property of the policyholder. Business losses or liability arising from a contract entered either personally or on behalf of a business are also not covered by umbrella insurance policies. Liabilities arising from criminal or intentional actions are excluded as well.

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Losey Insurance & Financial Services has over 30 years of industry experience helping people protect the things that matter most. Contact us to learn more or request a quote today!