An Umbrella Policy is a policy which is specifically designed to provide additional liability coverage when you have exhausted the limits of your traditional policies. If you are like most of us you carry several lines of insurance to protect your personal assets. These make include auto insurance, homeowner or renters insurance and perhaps even RV or boat insurance. Each of these policies offers coverage for described property and also provides some liability coverage in the event you injure another or damage their property. Within the liability coverage each of these policies also has a limit, which is a maximum amount payable per loss. If this limit is inadequate to pay for the total loss, you are personally responsible for the balance. A solution to this “underinsurance” problem is to purchase an Umbrella policy. As its name implies, this policy provides an “umbrella” of liability protection over each and all of these other policies. If the limit of your “underlying” auto policy, or homeowner policy or boat coverage is inadequate to pay all the damages in a given loss, the umbrella policy steps in and pays its limit of top of such underlyer.
Example: A race to the railroad crossing finished in a tie. The collision caused the derailment of the train locomotive which slid down an embankment and into a river. The cost to extract and repair the locomotive was over $1,000,000 and the driver of the automobile (who was miraculously unharmed) was held responsible. The driver’s auto policy paid its property damage limit of $100,000 and the umbrella stepped in and paid the balance. Without the umbrella coverage the driver could have lost all that he owned in an attempt to pay the damages.
An umbrella policy may also provide coverage (subject to a deductible called an SIR) not provided in the underlying policies such as worldwide auto liability coverage or coverage for libel and slander. If you are interested in more information or to obtain this valuable coverage please call us at (888) 772-4247.
This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverages in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.