When reviewing how comprehensive your insurance coverage is, it’s wise to at least consider adding umbrella coverage. Essentially, an umbrella policy is a secondary form of insurance – it picks up where your liability coverage leaves off. It can offer additional coverage for individuals, businesses, organizations, and even HOAs. Umbrella coverage is an add-on to other policies, such as commercial general liability, hired and non-owned auto liability, contractors liability, premises liability, employers liability, and other policies.
Having umbrella coverage will ensure that you have protection for all circumstances, including those for which your primary insurance policy may not offer adequate protection. It is considerably more affordable than stretching each individual policy, with basic umbrella coverage running from about $150 to $300 per year. Umbrella coverage will cover you against lawsuit settlements resulting from events such as:
- Accidents on your property
- Car accidents that you, or someone driving a company car, are at fault for
- Personal injury lawsuits. If someone, for example, were to slip and fall on an unkept or icy sidewalk in your community.
Umbrella coverage will protect your assets, should you be faced with multiple lawsuits that will stretch your policy’s yearly limit. There are three areas where umbrella coverage helps to protect you from hefty lawsuit settlements:
- Provides additional coverage when a claim exceeds the per-occurrence limit of your liability policy.
- Provides additional coverage when a claim exceeds the aggregate limit of your policy.
- Offers protection against claims that are not covered by your policy.
Additionally, umbrella policies cover any legal expenses that you will incur on top of your policy amount.
When Having an Umbrella Policy Pays Off
Is umbrella coverage really worth it? Typically, for the nominal extra cost, our answer is yes.
For example, say that you have a 1 million dollar general liability policy and a $200,000 auto liability policy. You also have umbrella coverage over both policies for 1 million dollars. Now, say that you get sued and reach a settlement of 1.5 million dollars – your liability policy will cover the first $1,000,000, and your umbrella coverage will cover the remaining $500,000. Later that year, you have an employee who gets in an accident while driving a company owned car and the resulting settlement is $400,000. Your auto insurance will cover the first $200,000, and the umbrella coverage will pick up the remaining $200,000. After that, you will be left with $300,000 in umbrella coverage for the remaining months of the year. Without the umbrella coverage, you would be stuck paying those overages, and any others to come during the rest of the year, out of pocket.
It is important to note that umbrella coverage does not cover all activities. For example, umbrella coverage will not protect you from intentional acts, crimes, or unnecessary or improper use of vehicles. Also, an umbrella policy will not provide you with excess health insurance coverage.
Call us at Blue Lime today to start the process of adding umbrella coverage to your insurance policies!