Umbrella insurance is liability insurance that provides extra coverage beyond the limits of your primary insurance policies. It is designed to protect you from financial losses if you are sued and found liable for damages that surpass the limits of your primary insurance policies. Here are some common terms and definitions associated with umbrella insurance:
Coverage Limit:
The coverage limit is the maximum amount of coverage provided by the umbrella insurance policy. This limit is typically in excess of the limits of your primary insurance policies.
Excess Liability Coverage:
Umbrella insurance provides excess liability coverage, which means that it kicks in once the limits of your primary insurance policies have been exhausted.
Per Occurrence Limit:
The per occurrence limit is the maximum amount of coverage provided for each individual claim or incident. This limit is typically higher than the per occurrence limit of your primary insurance policies.
Aggregate Limit:
The aggregate limit is the maximum amount of coverage provided for all claims or incidents during the policy period. Once this limit is reached, no further coverage is provided.
Self-Insured Retention:
The self-insured retention is the amount of money you pay out of pocket before the umbrella insurance policy kicks in. This amount is typically higher than the deductible of your primary insurance policies.
Covered Losses:
Umbrella insurance covers many losses, including bodily injury, property damage, and personal injury. It may also provide coverage for claims such as libel and slander, false arrest, and invasion of privacy.
Exclusions:
Umbrella insurance policies may have exclusions, which are specific situations or types of claims not covered by the policy. Examples of exclusions may include intentional acts, criminal acts, and business-related claims.
Premiums:
The premiums for umbrella insurance are typically lower than the premiums for primary insurance policies, as they are designed to provide additional coverage beyond the primary policies.
Understanding the common terms and definitions associated with umbrella insurance is important when considering this type of coverage. By knowing the coverage limits, per occurrence and aggregate limits, self-insured retention, covered losses, exclusions, and premiums, you can make informed decisions about whether umbrella insurance is right for you and your situation.