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Umbrella Policy | Contractors Liability

   |  May 23, 2016

Life in today’s economy could be life threatening and in order to secure yourself you need a very good umbrella policy to supplement your safety and security. There are times when you will find yourself surrounded by numerous problems and choosing an umbrella policy would help you make your way through these difficult times. An umbrella policy is an additional protection chosen apart from other insurance policies to ensure one’s safety and security. An extra measure is required if you want to protect yourself from unexpected damages and losses. There are times when a particular insurance policy will not be able to cover for severe damages and losses, but with the umbrella policy, you can rest assured that all expenses will be covered. A regular insurance cover cannot own up to certain circumstances that is why you need to get an umbrella policy as back-up in case your regular insurance policy is not able to cover your expenses in times of severe losses or damages.

Definition of Umbrella Policy

An umbrella policy, also known as an excess insurance policy, has an advantage over other types of insurance policies because it provides adequate insurance compensations where a regular insurance policy cannot suffice. Under an umbrella policy, affordable financial security and legal provisions are made to settle any claims for compensations. It simply works in your favor unlike other types of insurance policies that lapse.

When discussing an umbrella policy, one question that comes to mind is “what can an umbrella policy do for you?” This is where the advantages of umbrella policy come in. One of the advantages of umbrella policy is that it covers the claims which are not usually covered by other insurance policies. The protection that umbrella policies provide are usually constant unlike other insurance policies that do not provide constant compensation.

Factors to Consider When Gettting an Umbrella Policy

There are certain factors you need to consider when buying an umbrella policy. A good umbrella policy can come with valid and reliable car insurance or other types of insurance. In actual sense, you should choose an umbrella policy that is paired with another type of insurance policy. Checking important details of any umbrella policy you want to purchase is a very wise thing to do so as to know what you are getting involved in.

If you already have an umbrella policy, you are one of the smart people that care about proper coverage for your property. This is because an umbrella policy will cover your assets and future income. This type of policy provides additional liability coverage even for general contractors and builders. As a general contractor, if you have an umbrella policy it will cover any severe damage or loss you may face when involved in your projects. It is also advisable for plumbers, roofers and other sub-contractors to have this umbrella policy.

If you are still thinking of getting an umbrella policy because you are not sure of how much coverage they offer, well you can rest assure that it depends on the type of underlying policy you have that will determine the additional liability coverage you will get from an umbrella policy. For example, if you have an underlying policy of a lower coverage amount and you also have an umbrella policy of about a million dollars, when you get involved in a severe accident where you are the one responsible and your underlying policy cannot cover for it, your 1 million dollar umbrella policy will definitely cover for it.  If you feel your regular insurance policy isn’t enough, you can get a qoute on an umbrella policy.

Limits of an Umbrella Policy

There are limits that come with an umbrella policy and you should keep these in mind when your other policy is limited.

  • You should not go lower than what is required of you when using additional liability coverage. If you limit the amount the other insurance policy is to pay, you will be the one to complete it from your pocket because the umbrella policy will only pick up the rest when the underlying policy has reached its limit. The gap must be closed before the umbrella policy will take over.
  • Let’s say you have an umbrella policy with an underlying auto policy and you no longer have the auto policy, you can still keep the umbrella policy by buying non-owner auto insurance policy with 500 CSL limits (combined single limits).
  • You can also buy an umbrella policy on its own without merging it with an underlying policy. It is best for you to contact an agent before making any decision on which policy will be best for you.
  • Under worker’s compensation, an umbrella policy usually excludes liability especially if the act was intentional by you or your family members. When an underlying policy excludes any loss and there is no additional liability coverage then there is no coverage at all. In this case, you will be personally responsible for any damage and losses incurred.

Just to make it easier for you, an umbrella policy is a type of insurance policy that provides an extra legal and financial security in order to be able to settle your compensation claims and pay for your liabilities. It could be very imperative for regular individuals to buy a perfect umbrella policy insurance because of the advantages that comes with it. When related to general contractors, builders, plumbers, roofers and other sub-contractors, if an underlying policy is not able to cover your legal and medical expenses, an umbrella policy will justify the case. That is why it is very important for both general contractors and sub-contractors to get this type of policy.

For USA residents, there are many laws surrounding insurance policies, so just to make sure you are on the safe side, you should get an umbrella policy because it is extremely essential. You might have car insurance that is not able to secure the expenses for repairs and maintenance of your car, but with umbrella policy, all expenses will be covered. You no longer need to worry about your other insurance policies not being sufficient to cover your compensations when involved in an accident because you can now rely on the efficacy of an umbrella policy.

Published: March 3, 2015

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