Like asset insurance, liability insurance has proved its importance and efficiency that also explains its popularity. Umbrella insurance is a typical type of liability insurance, an excess one, which has become a fast-growing sector of this industry. Many people consider it a guard for their savings and other properties as well. How does this protection method work? Who is it for? What are the pros and cons? This article may help to solve these fundamental questions, as well as provide a broad view about umbrella insurance.
As mentioned above, umbrella insurance or so-called personal excess liability insurance, is a method that protects yourself from significantly potential liability claims or judgements. If these claims are large enough to exceed your existing liability limits such as homeowners or auto insurance, umbrella insurance will pay your debt.
What is covered and not covered
There are mainly four types of liability generally included in umbrella insurance policies: bodily injury, personaly injury, property damage and landlord liability. You may find that umbrella insurance not only protect the insured but his family members as well. However, there are also several liabilities that are not under the contract’s coverage. First of all, this insurance may not apply to the damages that you cause to your own belongings, not others. Besides, losses related to your business results is also not the applicable object. In additon, the insurer obviously refuses to pay for any damage resulted from illegal or intentional activities.
Who this insurance is designed for?
Generally, you may find umbrella insurance necessary when your total asset value is greater than your underlying liabilty limits. Moreover, it will make sense to purchase the insurance if you are about to take part in activities that embrace potential risks related to excess liability. Statistics show that people being a high-value property owner, landlord or having things that can lead to other’s injury may be likely to purchase umbrella insurance.
Pros and cons
We can list a lot of umbrella insurance benefits, ranging from providing excess liability coverage, extra unusual coverage, widely applicable extent or low charge. However, this also includes some undeniable drawbacks. For example, having had an auto or homeowner insurance is a must for this to be applied.