Accidents can happen, even to careful people. When you are at fault for an accident, injury or property damage, your liability coverage can protect you. But what if your liability coverage is not enough to cover the cost of damages or litigation? This is where umbrella insurance comes to the rescue. In the event that the costs associated with an accident or injury exceed your normal liability coverage, another party (often the injured person’s attorney) can file an umbrella insurance claim to collect additional funds.
If you’ve made the decision to purchase extra liability coverage so you are prepared for the possibility of umbrella insurance claims, get the help you need to get the right protection in place. Work with a local independent agent who will get to know you and help you find the answers to your questions like AJaye Brown with Southern Insurance Associates in LaFayette, GA.
Assets at Stake
Without proper coverage, all of the following could fall prey to claims payments:
- Personal property
- Real estate
- Retirement accounts
- Liquid assets
- Future income
Umbrella Insurance Coverage
You probably have standard liability coverage limits built into your auto insurance, homeowners insurance or renters insurance. You may even have a liability policy for your motorcycle, boat or RV. This coverage protects you and your assets in caseyou are held liable for causing damage to someone’s property or injuring someone.
Unfortunately, the minimum amounts required on insurance policies like auto or RV, for example, often will leave you and your assets vulnerable in the event of a large liability claim or lawsuit. Umbrella insurance coverage increases the liability limits on your home, auto, boat or RV insurance but also provides a much broader form of coverage.
What Are Umbrella Insurance Claims?
If you are responsible for severe injury or property damage to another person and you are sued, the umbrella insurance claim will be filed against you, the policy holder. Only after your other liability limits have been exhausted will your umbrella policy begin to pay for the damage or injury you caused.
How Do Liability Limits Work Together?
Once your liability limits have been surpassed, you are responsible for the remaining amount due out of pocket. Make sure you don’t have to pay out of pocket by understanding liability limits and buying the right fit for you. Begin by looking at your policy coverage and deductibles.
Let’s say your auto insurance and homeowner’s policies both have liability coverage in the amount of $300,000, and both policies have a deductible of $1,000. You also have an umbrella policy for $1 million with a deductible of $300,000.
You cause a serious car accident and get sued for $1 million. You pay your auto policy deductible of $1,000 and your auto liability pays the remaining $299,000. After that, since you have met your $300,000 deductible for your umbrella policy, it pays the remaining balance of $700,000. Make sure there isn’t a significant gap between your liability coverage amounts and your umbrella policy deductible, as that money will come out of your pocket.
Examples of Umbrella Insurance Claims
Accidents can be expensive, particularly if anyone is severely injured, or worse – when a life is lost. Umbrella insurance can cover large claims if you cause bodily injury or property damage to someone else. There are multiple ways you can be held liable and be in a position to pay damages. Take some of these cases, for example:
- You cause a serious car crash. Multiple people have injuries and the property damage is extensive. You are sued for medical bills and car repair.
- You have a party at your house and someone is injured. That person is hospitalized and out of work for a month or more.
- A moment of inattention while you adjust a radio station results in an accident with a cargo van carrying $500,000 worth of electrical equipment, all of which is destroyed in the crash.
- Your teenager is driving a friend’s car and crashes, injuring the other passengers.
- You’re accused of verbally assaulting someone and they sue for emotional duress.
In any of these events, if an injured party sues you for damages, the result may be a liability claim against your insurance policy. If you have umbrella insurance in place, it will kick in and pay the excess liability costs when your primary policy’s coverage is exhausted. In addition to covering the cost of a judgment against you, your umbrella liability may also help to cover the costs of your legal defense.
Make Sure You’re Covered
If you work with an independent agent in the Trusted Choice network before you face a large liability claim, you can be sure your assets will be protected.
A local member agent can work with you to answer any questions you have about umbrella insurance claims, and how to protect your home, assets and income in the event of an accident. Call AJaye Brown with Southern Insurance Associates in the Trusted Choice network today and get help with all of your coverage needs. 706-996-8788 or Info [at] SouthernInsuranceAssociates [dot] com