What is Umbrella Insurance?
Nearly every type of insurance comes with coverage limit. It’s quite possible that an insured individual may need more money than what an agency is willing to pay for an accident or other incident. Therefore, extra protection may be purchased to extend the payout ceiling of existing insurance plans.
Who it is For
Umbrella insurance is designed for people who own expensive property such as real estate, boats, aircraft, luxurious cars and commercial vehicles. Furthermore, this insurance plan protects large personal assets including intellectual property like websites and patents and investments such as stocks and mutual funds. Business owners may also benefit from having umbrella-type insurance.
How it Works
An insurance agency that underwrites an umbrella policy is willing to pay relatively large sums of money for hefty lawsuits. In essence, this plan provides supplemental compensation to other insurance packages that come with a maximum payout. When a person is sued, he or she would have to pay out-of-pocket for certain damages that are claimed by a plaintiff. For example, a property owner is liable for a personal injuries that occur on his or premises. With umbrella protection, the policy holder doesn’t have to worry about dipping into personal accounts to pay for big settlements.
Different Types of Coverage in Existence
Liability protection is the core feature of an umbrella-type insurance. An insured individual is immune against legal action that involves negligence and other possible wrongdoing. The insurance package pays for bodily injuries and loss of income in individuals who file a lawsuit against the insured person. Slander, libel and emotional distress are some other common legal elements that are covered under this insurance.
People who have a high net worth have legitimate reasons to be concerned about losing personal valuables and money due to lawsuits that seem illegitimate. With an insurance that has an umbrella clause, assets are protected from sudden loss that may seem unfair. Insured people who are found guilty of hurting others physically or emotionally can have peace of mind even if large sums of money have to be paid out.