What Is Umbrella Insurance And Who Needs It?
An umbrella insurance policy is a special type of insurance policy that kicks in after other policies have been exhausted. Essentially, it can be considered an insurance policy on other insurance policies.
Who Needs an Umbrella Policy?
An umbrella policy is ideal for anyone who is considering extending the coverage on one or more of their insurance policies, or for those who believe they might exceed the coverage of their insurance policies in an incident. Umbrella policies are often utilized by small business owners or professionals, such as lawyers and doctors.
How Does an Umbrella Policy Work?
An umbrella policy simply extends coverage of existing policies and can also fill in the gaps for things that are not already covered. For instance, if a business owner did not have earthquake coverage but did have an umbrella policy, that umbrella policy may cover the earthquake — even if the property coverage did not. Otherwise, the umbrella policy kicks in after other policies have been exhausted. If an individual’s car insurance policy covered $20,000 but the total costs of an accident was $30,000, the car insurance policy will pay for $20,000 and the umbrella policy will pay the remainder (up until the coverage cap).
What Are Different types of Umbrella Policy?
Umbrella policies all work in the same way. They extend an individual’s or company’s liability coverage. There are occasionally exceptions, for instance a business insurance policy may not cover an individual’s auto insurance but may cover the company’s commercial insurance. There are often different types of umbrella policy based on industry. For instance, there may be an umbrella policy that is targeted towards those within the medical realm or within legal fields. either way, however, the policy usually works about the same.
What Are the Major Benefits of an Umbrella Policy?
An umbrella policy is usually more affordable and versatile than extending individual insurance policies. For instance, rather than extending auto, homeowner, and business insurance, an individual can get a single umbrella policy to extend them all. It offers additional security and peace of mind.
Umbrella insurance policies are generally rather niche. Many business owners and professionals require umbrella policies for their operations, as it reduces their overall liability.