Umbrella Coverage & How to File a Claim

Let’s face it, we live in a litigious society!  In many ways, I miss the old days when people worked out their issues among themselves.  Today, many Americans will sue at the drop of a hat!

When you are deemed at fault for an accident, your liability coverage can protect you. But what if your liability coverage is not enough to cover the cost of damages or the cost of litigation?

If you don’t have an umbrella insurance policy, any damages above your policy’s liability limits will have to be paid by you out of pocket. If you do have umbrella insurance, you will need to know how to file a claim in case you are facing a large liability claim.

 What is Umbrella Insurance Coverage?

Your auto, homeowner’s or renter’s insurance all have standard liability caps built into them. You may even have a liability policy for your motorcycle, boat or RV.  An umbrella policy serves as a backstop. And like an open umbrella, it spreads out a second layer of protection for all your liability policies. When a claim on one of those policies exceeds the liability limits, the umbrella coverage steps in to cover the balance.

 Covered Claims.

If you or an immediate family member are held liable to pay damages, here are 5 potential situations where an umbrella insurance policy can kick in and avoid your paying big money out of pocket:

• You are at fault in a serious car crash that leaves three persons injured and a $150,000 BMW destroyed. You are sued for medical bills and the cost of replacing the vehicle.
• You throw a party, and someone is injured after falling down your stairs, suffering injuries that leave them unable to work for six months.
• While driving, a moment of inattention you read a text message on your phone results in an accident with a Sprinter Van carrying $450,000 worth of high-tech equipment, all of which is destroyed in the crash.
• Your teenager is driving a friend’s car and crashes, injuring the other passengers.
• You are accused of verbally assaulting someone and they sue for emotional duress.

Example of a Claim:

Your auto insurance and homeowner’s policies both have liability coverage in the amount of $400,000, and both policies have a deductible of $1,000. You also have an umbrella policy for $1 million with a deductible of $400,000.

You cause a serious car accident and get sued for $1 million.

• You pay your auto policy deductible of $1,000 and your auto liability pays the remaining $399,000.
• After that, since you have met your $400,000 deductible for your umbrella policy, it would pay the remaining balance of $600,000.

The Following are 4 tips to Filing an Umbrella Insurance Policy Claim:

1. To file an umbrella insurance claim, contact your umbrella insurance provider once you know that a liability insurance claim is going to exhaust the limits of your home or auto policy.
2. You can file an umbrella claim while a liability claim is still in progress, and the claim can be handled by the same adjuster.
3. Depending on the situation, you may need to provide your insurer with additional documentation, so be sure to contact your adjuster for more information.
4. You can only file an umbrella insurance claim if a home or auto liability claim has exceeded the limits of your policy.

For more information or to obtain an umbrella insurance policy quote, feel free to reach out to us at Rob@InsuranceDoctor.us.