Some Basic Questions:

Why would I need an Umbrella Policy?
There are many situations where a standard liability policy is simply not enough coverage.  An Umbrella Policy allows you to protect yourself against major lawsuits in two ways.  First, the umbrella provides excess liability over underlying coverage. Second, the umbrella provides liability coverage that may be excluded by homeowners or auto policies.

Just what is a Personal  Umbrella Policy?
Often times referred to as a personal catastrophe policy, a personal umbrella policy,supplements the basic personal liability coverage provided under homeowners and auto policies.  The umbrella was created to protect people from large losses.

What special protection is afforded by an Umbrella Policy?
Personal injury losses that may be limited or excluded under most homeowner's policies will receive broader coverage under an umbrella policy.  As a rule, personal injury does not have a uniform definition; however, just about all umbrellas will refer to personal injury to include bodily injury.  Most policies also include in their definition of personal injury: Mental anguish, false arrests, wrongful eviction, wrongful detention, malicious prosecution, invasion of privacy, assault and battery, slander, libel and defamation of character.

How does this policy work?
Generally, an umbrella policy pays all of the covered loss that exceeds the limits of the base or underlying policy.  If, for example, the basic policy paid $200,000 on a slip and fall injury and the claim was for $250,000, the umbrella would cover the $50,000 over the basic policy's $200,000 limit.

Does an Umbrella Policy require a deductible?
Usually umbrella liability policies have two types of deductibles.  These are also referred to as retained limits.  Depending on the loss, one of them pays first before the umbrella pays.  If the loss is covered by the underlying policy, that policy pays first up to its maximum limit and then the umbrella policy kicks in.  Another consideration is that a loss may occur and is covered by the personal umbrella but not an underlying policy.  In this case, the insured must meet a deductible that is referred to as the SIR which stands for Self Insured Retention.  For example, a $1 million umbrella usually has a $250 SIR that the insured must pay before the umbrella kicks in.

What is the need and purpose of Umbrellas?
People can be held legally liable to pay damages for the bodily injury or property damage caused by their negligence.  The need for liability can arise as a result of a person's personal or recreational activities as well as a person's business.  Some of the higher liability claims arise when insured's are entertaining guests or permitting people to use their property.  Just try and consider how a jury's desire to punish a negligent person could result in a judgment for damages in the following realistic situations:
    * A practical joke misfires and results in a lawsuit for defamation of character.
    *A neighbor or guest falls on a person's property, resulting in permanent disability.
    * A protective watchdog proves that his bite is even worse than his bark.
    *A person's child  accidentally breaks an expensive vase while at another person's house.
    *A moment's inattention while driving results in a multi-car accident
    * A spark from burning leaves starts a fire that inadvertently burns a neighbor's roof.
    * A letter to the editor triggers a libel suit.
The purpose of the Personal Umbrella Liability Policy was created to expand the insured's liability coverage by filling gaps in the basic liability coverage provided by underlying policies and to reduce the insured's worry, trouble, and burden of facing personal litigation on his or her own.  Personal umbrella liability coverage is usually sold in units of $1 million or more and may be added to a basic homeowners or auto policy that is already written by the insurance company.  Umbrella policies provide insurance for accidents and other situations not ordinarily covered under primary insurance, subject to a deductible of between $250 and $1,000.

There is no standard personal umbrella liability policy.  The policy's forms, format, and coverage vary by insurer.  All personal umbrella policies are designed to give insureds and their families two types of extra liability protection:
    1.  They add to the liability of any homeowners, auto, or other liability policies
         currently in force.  Most homeowners policies provide a basic personal liability
         coverage of $100,000; auto policies typically contain a combined single limit
         of $300,000 per occurrence.  An umbrella policy supplements these basic
         personal liability coverages.
    2.  They are designed to cover liability exposures that other policies do not cover.
         The umbrella policy is designed to cover some of the more unusual exposures
         such as personal injury claims, that an insured might face but they are typically
         not covered under most standard liability policies.