What an Umbrella Policy Offers
You could lose all of your personal belongings if you are sued and don't have an umbrella insurance policy. Sure, your automobile and homeowner's insurance provide basic liability coverage. However, if you're sued for more money than what either of those policies cover, the person suing you can come after your personal assets. An umbrella policy provides coverage above and beyond your personal insurance coverage, giving you additional defense and protection.
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Bodily Injury Liability
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Bodily injury liability covers physical damage to another person's body, extending the coverage you have on your auto or homeowner's policy. This insurance pays for medical bills if someone is injured as a result of an automobile accident and the insurance company finds you at fault, if someone gets bitten by your dog or even if someone falls on your property and needs medical attention.
Property Damage Liability
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When you damage another person's property, the cost to repair or replace the property could be substantial. This portion of your umbrella policy covers the damage done to property you don't own. Examples include if your pet ruins your neighbor's property, your child accidentally damages school property or you damage another vehicle when you are deemed at fault in a automobile accident.
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Owners of Rental Units
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Landlords face additional liability issues. As a landlord, you may be held responsible for the actions of your tenants. For example, if your tenant's dog bites someone and you're held responsible, the umbrella policy would pay for the damages incurred. If someone slips and falls on your rental property or trips on a crack in the sidewalk of your complex, the umbrella policy would pay for any damages the person claims.
Additional Coverages
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An umbrella policy also covers additional risks not otherwise covered in your basic liability insurance policies, such as slander and libel. Slander is is when someone sues you for something you've said that is deemed injurious, and libel is when someone sues you for statements you write that are injurious to them. Other risks an umbrella policy covers include false arrest, detention or imprisonment, malicious prosecution and shock or mental anguish. The policy doesn't just pay for damages, however. It will also pay for legal fees if you're the victim of a malicious lawsuit or if you are falsely arrested or imprisoned. In this sense, the policy is protective, rather than defensive.
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