Umbrella insurance refers to a liability insurance policy that protects your assets and future income in addition to your primary policies. It is distinguished from excess insurance in that excess coverage goes into effect only when all underlying policies are totally exhausted, while umbrella is able to “drop down” to fill coverage gaps in underlying policies. Therefore, an umbrella policy can become the primary policy “on the risk” in certain situations. The term “umbrella” refers to how the policy shields your assets more broadly than primary coverage.
Typically, an umbrella policy is pure liability coverage over and above the coverage afforded by the regular policy, and is sold in increments of one million dollars. The term “umbrella” is used because it covers liability claims from all policies underneath it, such as commercial auto insurance and business owners policies. For example, if you carry an commercial auto insurance policy with liability limits of $500,000 and a business owners policy with a limit of $1,000,000, then with a million dollar umbrella, your limits become in effect, $1,500,000 on an commercial auto liability claim and $2,000,000 on a business owners claim.
Umbrella insurance provides broad insurance beyond traditional business owners and commercial auto. It provides additional liability coverage above the limits of business owners, commercial auto, and other commercial liability policies. It can also provide coverage for claims that may be excluded by the primary policies. These may include, but are not limited to:
FOLLOW US