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Umbrella Insurance coverage

Is not a substitute for traditional home or auto insurance. It is a secondary liability insurance policy providing extra coverage beyond your traditional insurance limits.

For example, your home insurance probably provides both property and liability insurance coverage. Let's say that your home liability coverage has a limit of $200k, but a guest becomes injured while visiting your home and sues you for $1.5 million in medical fees and lost wages. If you have umbrella insurance coverage, you would pay the deductible for the home liability insurance, and the home insurance policy would cover up to $200k. Then the umbrella insurance policy would go into effect and pay for the rest.

Umbrella insurance coverage also applies to auto insurance.

Let's say that you rear-end a BMW and after the investigation you are held responsible for the other driver's totaled car, extensive medical injuries, and lost wages. The settlement amount exceeds your auto insurance policy limits. Without umbrella insurance, you would need to pay the remainder out of pocket. Umbrella insurance coverage pays the remainder of the settlement, and you pay nothing but the auto insurance deductible.

Because umbrella insurance is a type of liability coverage, it does not protect from financial losses due to fire, theft, or other property damage. These types of situations are covered under traditional property insurance up to the value of the property

Liability insurance is a type of insurance policy that protects people from losing money when they are accused of causing harm to others. It is a component of umbrella insurance  

The most well-known example is automobile liability

insurance, which will pay for damages up to a certain amount when a car accident is the policyholder's fault. If you don't have car liability insurance and you are responsible for a car accident, you would need to pay for the damages out of pocket, which can be financially devastating. Liability insurance protects you from this sudden financial loss.

But liability insurance applies to more than just vehicles. Anyone who is at risk of being sued needs to carry liability insurance on their assets. And in today's legal climate, almost everyone is at risk of being sued! If you drive a car, own a home, rent an apartment, own a business or office, have a boat, or practice in a profession that directly affects people like medicine or dentistry-then you are at risk of being sued. Anyone who owns a restaurant, sports venue, or public meeting place should also carry liability insurance.

There are three main classes of liability insurance: 1) Public, 2) Product, and 3) Employer. Public liability insurance is needed in any industry that has the potential to affect third parties. Product liability insurance is needed by any company involved in manufacturing or supplying goods. And employer liability insurance protects both employers and employees in the event that someone gets injured on the job.

Umbrella Coverage

If you are sued beyond what your usual liability policies cover, you will be responsible for paying the remainder. Many people end up in big trouble this way, because someone legitimately or vindictively decided to "sue their pants off" and won the legal battle. Don't let this happen to you. You can prevent it by buying umbrella insurance

Umbrella insurance policies go beyond the amount covered by your other policies to pay for fiscal damages up to several million dollars or more, depending on your policy.

Here's how umbrella coverage works:

simply picture yourself holding your auto insurance policy in one hand and your homeowners' policy in the other hand. Both of these protect you up to a certain amount-once you pay the deductible, the insurance carrier will pay up to, say $100,000. But what if someone falls down your stairs and sues you for $500,000 in medical fees and lost wages? Now picture an umbrella over your head. The umbrella coverage kicks in to pay for the remaining $400,000, and you pay nothing out of pocket. (Does umbrella insurance cover everything? No. Pets, for one example, aren't covered; for that you'll need pet insurance

This is a simplified version of umbrella coverage. Employers and property-owners usually buy more coverage than individuals, because they have more to protect and greater risk. Entrepreneurs and professionals who work with the public often carry multiple types of insurance beyond their personal auto and homeowners' policies, as well as umbrella insurance.