What is Umbrella Insurance?
An umbrella insurance, otherwise known as an excess liability policy, provides additional limits of liability to pay loss “over and above” your general liability policy, which accounts for the name. Some of the basic questions are broken down in more detail in our FAQ area.
Who Can Benefit from Umbrella Insurance?
Catastrophic losses do occur. Nearly every car accident can be blamed on that one driver who created the incident. “But for” that driver’s negligence the accident would not have occurred. An umbrella will provide additional funds to pay expenses incurred in settling those losses, which could amount in the $millions.
Occasionally losses may occur that are not covered in your general liability policy that might be covered in an umbrella. This is rare, but possible. It is always best to cover for known exposures in the primary policy.
What Does Umbrella Insurance Cover?
There are two kinds of “umbrellas”. The traditional “umbrella liability” policy covers what is covered in the “primary” policies plus other coverage not excluded by the umbrella policy language. An “excess liability” policy is said to be “following form” in that is covers only what is covered in the primary policies.
For many individuals the primary policies would include a homeowner’s policy, a private passenger auto policy, a boat policy, and other individual personal liability policies. For a business the “primary” policies would often be the auto and general liability policies for the business. The primary policies could also include a professional liability policy, a boat policy, or any other commercial liability policy.
How Much Umbrella Insurance Do You Need?
The majority of personal umbrellas have $1,000,000 limits. Many celebrities have limits of as much as $25 million.
The majority of commercial umbrellas have $1,000,000 limits. Many businesses have limits of as much as $50 million.
To decide what limits you need you need to consider such things as your current assets and future probable income. There is no magic number. If you have environmental exposures a $5 million limit is common.
Umbrella Insurance Coverage Discounts
Umbrella liability policies and excess liability policies are essential to your financial wealth protection. Of course, making sure you get the best value for your money is important. There are quite a few discounts that could work to reduce your premium.
Umbrella Liability Claim Examples
Umbrellas are called in to answer losses where the legal expense and court awards (or settlements) exceed the limit of liability and defense cost limits provided in the primary policies.
Umbrella Coverage Rate Costs
What is the normal umbrella coverage rate cost? During my five decade career I’ve sold umbrella liability policies for a s little $150 and as much as $350,000 annual premium. The average personal umbrella policy for $1 million for a person with average exposures (one home and two cars, no extraordinary hobbies) would run about $200 – $250 annually.
Do You Need More Liability Coverage?
A large percentage of people and businesses have an umbrella (over 10%). It is suggested by some industry experts that only about half of those who should carry and umbrella liability policy are currently doing so.
Industry Expert Editorials
While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.