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Term of the Day

No, an Umbrella Policy is not a policy that will insure your umbrella. Even though it keeps you dry or blocks the shun from your supple skin –  it’s much more than that. From our insurance terms section, this is the definition:

Umbrella Policy – Coverage for losses above the limit of an underlying policy or policies such as homeowners and auto insurance. While it applies to losses over the dollar amount in the underlying policies, terms of coverage are sometimes broader than those of underlying policies.”

A personal umbrella policy comes in handy in the event of a lawsuit or liability judgment

If you’re sued and the judgement costs more than what your insurance policy overs, the Umbrella Policy covers the difference and protect your assets.

The purpose of an Umbrella Policy is to to make sure you’re protected above the limits you already have. Insurance companies will typically offer auto and homeowners insurance up to around $500,000 for liability. It’s enough to cover most claims but serious accidents can result in lawsuits above $500,000. An Umbrella Policy can offer an extra layer of protection for your assets.

Another example is  if you have a home insurance policy with liability coverage of $100,000, the Umbrella Policy will pay claims above $100,000, up to the limit you select, such as $500, 000. Or if your liability limit on your car insurance policy is $250,000 of bodily injury protection per person and $500,000 per accident, your umbrella coverage kicks in after you exhaust that coverage.

An Umbrella policy will also cover liability coverage when you are sued for slander, libel, false arrest, malicious prosecution or other personal liability situations.

Some links you can read to learn more about Umbrella Policy :

http://ezinearticles.com/?Is-an-Umbrella-Insurance-Policy-For-You?&id=4245554

http://www.fivecentnickel.com/2010/11/09/do-you-need-umbrella-insurance/

http://www.thewisdomjournal.com/Blog/umbrella-insurance-coverage/

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Written by lordsinsurancelog

December 6, 2010 at 9:58 am