What Is Umbrella Insurance Policy?
Umbrella insurance is extra liability insurance. It protects an individual from claims and lawsuits by providing additional liability coverage above the limits of the homeowners, auto, and boat insurance policies. The policy provides insurance cover when these policies have been exhausted. In addition, the policy provides cover for claims that may not be covered by other liability policies, such as false arrest, coverage on ownership of rental units.
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Umbrella insurance provides insurance coverage for the following:
- Damage to property
- Certain lawsuits such as slander, character defamation, etc.
Personal liability situations described below:
- Bodily injury liability: It provides cover for any injury or physical harm caused to another person, such as injuries due to a serious car accident where the insured is at fault.
- Property damage liability: It provides cover for damages or loss to another individual’s property; for example, damage to school property caused by the insured’s child, etc.
- Rental unit owners: It provides protection against claims and lawsuits for landlords; for example, in case a person suffers an accident on the landlord’s rental property.
Umbrella liability provides insurance cover for the following cases as well:
- Slander meant to harm a person’s reputation
- Libel (a written statement expressed in print, televised or on the Internet) meant to harm a person’s reputation
- Malicious prosecution
- Shock or mental anguish
- False arrest, detention or imprisonment
Comprehensive Personal Liability Coverage
Comprehensive personal liability coverage refers to the insurance coverage of an individual against property damage or loss or bodily injury occurring in his/her premises that is not covered or is not a part of the usual homeowner’s policy. This coverage is usually offered as a component of the homeowner’s policy or an umbrella policy. It may be provided separately in case the insured is not eligible to obtain a homeowner’s policy.
The comprehensive personal liability policy protects the insured in cases such as the following:
- Injury caused by a pet to a visitor at the insured’s premises
- Visitor suffers an injury in the insured’s premises
- Insured is at fault for any damage caused to the property of an individual such as home or car.
- Insured causes a costly car accident
Thus, comprehensive personal liability coverage will pay for covered losses if a third party claims bodily injury or property damage that the insured is found responsible for. Injuries that occur outside of insured person’s premises are also covered provided the injury is caused by the insured or a family member of the insured, a household employee, or the insured person’s pet.
The expenses covered by comprehensive personal liability include payment for defence or solicitors’ fee (even if the suit is groundless, false or fraudulent; and payment of all the necessary medical expenses already incurred by the insured or shall incur within three years from the date of an accident that has caused bodily injury.
Exclusions Under Comprehensive Liability Coverage
There are certain exclusions that apply to comprehensive personal liability. The coverage does not include bodily injury or property damage which results directly or indirectly from the following:
- War or warlike act or situation even if a nuclear weapon is used, resulting in catastrophic destruction of property and loss of human life
- Use of vehicles such as cars for racing or demonstrating stunts
- Failure to render or rendering a professional service that causes harm to an individual
- Damage caused due to an intentional act by the insured or at his direction
- Nuclear hazard
- Earthquakes that cause destruction of property or loss of human life. However, damage caused by fires, explosion or breakage of glass in the event of an earthquake is covered by comprehensive personal liability. The insured can purchase an additional policy for protection against earthquakes.
- Loss caused by floods, such as destruction of property or injury or loss of human life is not covered. However, direct loss by fire, explosion, or theft resulting from flood is covered. Other water-related exclusions are water seepage below the ground, backup of sewers or drains and overflow of a sump.
- Transmission of a communicable disease, including sexually transmitted diseases by the insured.
- Any medical expenses related to the insured or members of the household are excluded; however, medical expenses of household employees are covered.
Comprehensive personal liability provides additional coverage in the following areas:
- Claim expenses: The policy would cover all costs that are incurred in settling a claim or in the defence of a suit with attorneys of the insurer’s choice.
The policy would also cover the premiums on bonds that are required in a suit. However, in this case, the amount of the bond should not be more than the coverage.
- First aid expenses: The insurer would pay for the cost of first aid incurred by an insured for bodily injury to others covered by this policy. However, the insurer would not pay for the expenses of first aid to the insured.
- Damage to property of others: If the insured requests, the policy would pay up to $500 per occurrence for property damage caused by the insured to the property of others. This coverage applies when the insured is not legally liable for the damage.