Most people are familiar with at least a few kinds of insurance policies. Homeowner’s, automobile, and business coverage are often required in one form or another either by government or industry regulations. For example, automobile liability insurance is a minimum requirement to legally operate a personal motor vehicle in the state of Nebraska. Liability policies exist to insure against damages resulting from a policyholder’s actions, such as those due to traffic accidents. An umbrella policy is a type of liability insurance which provides extensive coverage, which begs the question: what is not covered under an umbrella insurance policy?
Umbrella insurance is a supplemental form of insurance. It is not a standalone policy, as it goes above and beyond other liability policies like those covering homes and vehicles. Following an incident, they serve to assist with lawsuits involving claims of liability for injuries and damages which exceed the amount of primary coverage. Umbrella coverage generally starts at $1 million, and it tends to have more affordable premiums than other liability policies.
One must meet certain criteria before qualifying for this type of policy. You must already have a standard policy with a certain coverage limit before adding supplemental umbrella insurance. If your existing policy provides you with sufficient liability coverage, umbrella insurance may be unnecessary. However, it’s tough to determine exactly how much liability coverage is sufficient for any individual, especially if they engage in any activity which increases personal liability.
Nonprofit organizations and sporting leagues rarely provide their volunteers with liability protection, so it’s a good idea to consider an umbrella policy if you participate in either. Also, if you are a landlord, hold significant assets, or ever host risky events like pool parties, you will certainly benefit from the extra coverage. The more assets you own and the more likely you are to cause damages to others and property, the more beneficial an umbrella insurance policy will be for you and your family.
Umbrella insurance only applies excess personal or business liability protection. Liability means being held accountable for damages sustained by others due to your actions. Thus, umbrella policies do not cover your own costs in the event of injury or loss of property. Criminal and intentionally harmful acts are also excluded, as are damages associated with uninsured pets, property, and vehicles.
Umbrella policies are designed to kick in once another policy’s liability limits have been reached. They work in tandem, so if the primary policy doesn’t cover something, it’s probable that the umbrella policy won’t either. Personal umbrella policies exclude business coverage, even if you are an entrepreneur or operate from home. They will only cover expenses if you personally, not your business, are found at-fault for an accident. That said, commercial umbrella insurance does exist to enhance standard business policies, though it excludes personal liability protection.
Insurance companies are unlikely to insure those they deem to be too high-risk. Other common ineligible exposures include preexisting charges or lawsuits, discrimination and other offences against employees, and risky professions such as activists, reporters, broadcasters, and law enforcement officers. High profile public personalities like actors, influencers, entertainers, politicians, pro drivers and athletes are also often excluded from personal umbrella liability policies.
Homeowner’s, business, and automobile insurance are important to safeguard against claims of injury and damage. Standard policies offer a wide variety of coverage to suit the needs of any individual or organization. In the event of a major incident, though, basic policies may not always cover the expenses of repairs, legal support, and medical treatments. Umbrella insurance serves to supplement standard coverage beyond its limits, affording policyholders greater protection from claims of liability. For more information, feel free to read our previous blog post or contact us directly with any questions.