Umbrella Liability Insurance Policy

An umbrella liability insurance policy is excess liability insurance over all other insurance policies. For example, if you have a house, two cars, a motorcycle and a vacation home, then an umbrella policy will cover extra liability insurance over everything, rather than increasing the liability insurance over each individual policy.

Liability Insurance

Liability insurance pays for damages arising out of neglect or actions. For auto insurance, a driver may be liable if he causes an accident. For home insurance, the owner could be liable if he didn't maintain his driveway, and someone slipped and hurt himself on it. A boat owner could be liable if he drives too fast and a passenger gets injured. There are multiple reasons to be sued for injuries and property damage that you are liable for, and by carrying sufficient liability insurance, the insurance company pays for the damages rather than you. An umbrella policy is extra protection in case you are sued for a large amount.

Large Liability Claims

You can never have too much liability insurance because you never know how large of a lawsuit you might face. If you cause an accident that kills someone, you could be sued for a very sizable amount. Some states have limits on how much you can be sued for, but many have no limit.

Protect Against the Unexpected

You never know where a claim might come from. The very nature of insurance is to protect against the unknown. An umbrella policy provides extra coverage over all of your insurance policies so it helps take the guesswork out of which policy to increase. You are able to increase all of your insurance at once.

Additional Coverage and Exclusions

Many umbrella liability policies do more than simply increase your liability limit: they also give you broader coverage. Some policies cover you for sitting on civic or religious organization boards. This protects you in the event an action taken by you, such as running a fundraiser that leads to someone being injured or property damage, results in a lawsuit. Most umbrella policies also include the court costs as long as the settlement is within your liability limits. Umbrella policies do not pay for intentional acts and do not pay for punitive damages in lawsuits against you.

Cost Savings

Umbrella policies are generally less expensive than increasing the liability on all of your policies, especially if you have several insurance policies. The cost can also be offset by potentially increasing the deductibles on other policies.

References

• Insure.com: Umbrella Insurance Extends Your Coverage
• MSN Money: Umbrella Policies Plug Holes In Your Coverage