Umbrella insurance is a special supplementary policy that protects policyholders from costs just like an umbrella protects people from the rain. Umbrella coverage is for any person or business executive that already has home insurance, auto insurance, business insurance and the like. The policy’s main purpose is to cover losses that are not covered by other policies. Its secondary purpose is to add an additional layer of coverage to the coverage that already exists. Umbrella coverage policyholders can use their policies for the following purposes:
The Cost of Legal Defense
Umbrella policies cover the costs of legal defenses for the policyholder. Some cases end up going on for long terms. Umbrella coverage can provide the insured party with hundreds of thousands of dollars toward additional coverage.
Additional Lawsuit Coverage
Umbrella policies usually provide a $1 million added benefit for lawsuits. The policyholder can use those funds to pay a person for damages that he or she caused to a customer, driver or someone else.
Another thing that umbrella coverage does is to provide the person with additional coverage for situations that are not covered under the normal policies. Examples of additional liabilities are slander, libel, false arrest and privacy invasions. The policy could cover incidents that involve rental cars, as well.
Two types of umbrella insurance exist: personal umbrella coverage and commercial umbrella coverage. People usually purchase umbrella coverage to supplement their home and auto policies. A commercial umbrella policy is a policy that covers business related expenses.
The umbrella policy picks up the table once the covered party has reached the limits of the primary insurance policy. The umbrella policy will then pay benefits up to its full potential. Interested persons can speak to their primary insurance providers and ask them if they offer umbrella coverage. The monthly premium for umbrella coverage varies but it usually does not cost the covered party much. The monthly premium could range from $5 a month to $15 a month depending on the benefits that it offers. The annual premium average is at about $150.