Sometimes an insured who relies upon the liability protections offered by an insurance policy discovers an accident that causes damage beyond the coverage limits. This situation imposes severe financial hardship. People seek umbrella insurance to help protect themselves against these types of unforeseen catastrophic financial losses. Umbrella policies supply liability insurance protections after the exhaustion of homeowners, auto, or watercraft insurance coverage limits.
Who Needs Umbrella Insurance?
Usually, anyone in danger of losing extensive assets should consider seeking umbrella insurance protection. Additionally, individuals who engage in activities that involve a high risk of incurring hefty liability may also choose to purchase umbrella insurance. Certain types of accidents result in very significant jury awards. An umbrella insurance policy offers an extra layer of protection for an insured against declaring bankruptcy.
How It Works
Customers must purchase umbrella insurance before an accident occurs, of course. Today, many customers obtain favorable rates for this type of coverage by buying it through an existing insurance provider. For instance, a customer who obtains the maximum available level of homeowners insurance from an insurance company may then also purchase umbrella insurance from the same firm.
Different Types of Coverage
Typically, umbrella insurance offers financial compensation to reimburse people injured by incidents which produce liability: accidents, or other risky activities. For example, if a homeowner’s pet dog suddenly attacks and mauls a neighbor and the resulting court award exceeds the maximum amount of the insured’s homeowners policy, umbrella insurance may help pay the victim’s damages. Umbrella insurance providers frequently help cover hospital bills, surgeries, lost employment, and other types of losses. These policies usually won’t pay for punitive damages resulting from intentional misconduct by an insured.
Umbrella insurance policies offer greater peace of mind for an insured. If an accident exceeds the existing insurance coverage amount, the umbrella policy may “kick in” as a secondary insurance source to help pay the plaintiff’s bills. This type of policy typically helps cover some costs of successfully defending a liability lawsuit, also.