2022 Insurance Pro Tip #9

Umbrella Policies (aka Excess Liability)

 

Umbrella policies are liability policies that either households or businesses buy to give them additional liability protection in the event that an accident or mishap occurs, resulting in personal or property damage, that is directly their fault or the fault of someone who works for them.

Personal umbrella policies, for households, are added protection to their in-force home, auto, boat, RV, motorcycle, etc. polices that offer anywhere from $1M to $5M in additional liability protection.

Business umbrella policies are added protection to their in-force Commercial General Liability policies with a myriad of option regarding protection limits.

When considering an umbrella policy, please keep in mind that minimum liability limits with other policies must be met. For instance, most personal umbrella policy carriers mandate that a minimum of $300,000 in liability coverage is on their current homeowner's policy. In addition, they will also mandate minimum liability limits of either 100/250 or 100/300 on their auto policies. Business umbrella policies require underwriting factors much equivalent to this as well. This is why the coverage is referred to as "excess liability" - additional coverages that you may need if you're sued for amounts that exceed your liability limits on other policies.

At the end of the day, umbrella policies can give a family or a business much more comfort and peace of mind for pennies on the dollar. A family that meets the liability limits on their home and auto policies can purchase a million dollars worth of additional liability protection for a little as $150-250 annually.

A lot of people do not know that these policies even exist. If you're an active person who enjoys boating, RVing, cycling or a car enthusiast, then we would highly recommend considering buying additional coverage. If you're a business owner who works directly in construction, does specific artisan contracting work, or any other trade where the probability of high-risk losses could occur, buying a business umbrella policy for your company shouldn't even be "considered".....it should be done.

Fun fact: Liability coverage limits not only pay the awarding of a claims settlement filed against you, but can be utilized to pay for legal fees during a lawsuit (that is directly involved with the coverage the policy protects) if counsel is retained.