A personal umbrella policy, or umbrella insurance, helps protect you from claims and/or judgements that are large and could be devastating for you and your family. An umbrella policy is beneficial when you reach your liability limits on insurance policies such as homeowners or auto insurance. A limit is the maximum amount that your insurance company decides it will cover.
Incidents A Personal Umbrella Policy Will Not Cover
There are four examples of what an umbrella policy will not cover once your other insurance policy has reached its maximum limit:
- personal belongings
- business losses
- intentional or criminal acts or omissions
- written or oral contracts
Other things to take note of with a personal umbrella policy include:
- Umbrella insurance helps cover costs if you are deemed responsible for damaging another person’s property, but not if you cause damage to your own personal property. For example, if your bathroom floods and causes internal damage within your own home, your umbrella policy will not kick in, even if your homeowner’s insurance has reached its maximum limit.
- Personal umbrella insurance policies typically do not help cover business losses due to the operation of your business or damage your business property receives. This also includes home-based businesses. It does not matter whether your business is run from a building in town, or from the comfort of your own home, your personal umbrella policy will not help cover losses or damages. This also applies to other liabilities, including lawsuits accusing the business of malpractice, etc.
- If you intentionally cause harm or damage due to your own criminal or illegal actions, your personal umbrella policy will not cover any costs that remain after you maximum limit is reached. Personal umbrella insurance is not responsible for the consequences of your actions.
- Finally, if you have entered into a contract that is written or verbal, your personal umbrella policy will not provide coverage in the case of any liabilities that occur pertaining to the contact, whether it be written or oral.
Incidents A Commercial Umbrella Policy Will Not Cover
A commercial umbrella policy simply takes effect when you reach your limit on your other liability insurance coverage. There are four instances where your commercial umbrella coverage will not take effect:
- damages within the underlying policy limits
- professional errors
- employee discrimination lawsuits
- business property damage
You will not receive coverage for damages that occur within your original policy limits, meaning you have not reached your maximum limit with your first policy.
If professional errors occur, you must be covered by a professional liability policy known as errors and omissions insurance. You cannot add an umbrella policy to this type of insurance. If your business experiences an employee discrimination lawsuit, you must have employee practices liability insurance to cover the expenses related to the discrimination claims brought against your company. You cannot add umbrella insurance to this policy.
Finally, your business owner’s policy should include a commercial property insurance portion in it. This will help cover the expenses related to damages caused by fire, theft, or damage caused by weather. You can only add an umbrella policy to a liability policy, not an insurance policy.
Get The Coverage You Need
At All Things Insurance, we can help you determine if an umbrella policy is right for you. Give us a call today at (763) 645-5450 to speak with an agent and get started finding the right policy for your needs!