An umbrella insurance policy is a type of extra liability insurance used by many businesses. This insurance is crafted to protect the insured against significant claims and lawsuits. And ultimately helps to protect the insured’s assets and the business future. So let’s discuss in this article what are the important features of an umbrella insurance policy.
An umbrella insurance policy provides the following coverage:
- Personal liability situations
- Damage to property
- Certain lawsuits
Many insurances cover the above points, but the primary feature of an umbrella insurance policy is that it ensures above and beyond the limits of those policies and covers some situations that aren’t covered by the other types of policies.
Following are the features of an umbrella insurance policy:
This type of liability insurance offers broad protection, and as said above, it covers the insured above and beyond the limit of liability insurance. Thus, it provides an extra layer of liability protection. Without commercial umbrella insurance, would obligate businesses to pay out of pocket for legal fees, damage expenses, and medical bills that exceed the limits of their business coverages.
The insured also gets the replacement of primary coverage once exhausted or reduced the primary aggregate limits of the liability.
For any uncovered claim by an underlying policy or when exhausted the limits of liability. Then the umbrella coverage covers the defense cost as well. Anyone who has an underlying commercial liability policy is eligible for a commercial umbrella liability policy.
This type of excess liability coverage provides protection against the possible devastating economic losses too.
Umbrella insurance policies cover significant property damage where the standard insurance liability limit may be exhausted when the insured is at fault when he destroys another vehicle and other property.
It covers serious bodily injury where the current insurance liability limit is insufficient. In order to cover medical and other costs related to a third-party bodily injury in particular premises.
It also covers libel or slander where lawsuits result from something that the insured says or writes about another person or business.
It covers for malicious prosecution, where the insured has filed a suit against someone and in turn issued for the wrongful, or malicious prosecution of that individual.
‘Intelligent SoftTech’, an IT company in Mumbai was well-known for the last seven years of its inception. With a talented employee base and successful management, the profit numbers of the company were showing year-on-year growth. Being in the growth stage currently, the company increased its operations, verticals as well as employee count.
The management of the company thought that it’s essential to have insurance policies for the different needs of the company. By contacting a well-known insurance company, the management acquired various policies to secure and protect the company in its growth stage.
One day, a telephone repairman arrived at the office building of ‘Intelligent SoftTech’ to make repairs in disconnecting the network on a rainy day. On his way to one of the interior stairwells, he slipped on the slate stair and had a massive fall. Nobody had the idea of the accumulated water on the stairs.
Due to the severe fall, the telephone repairman had to undergo several knee, back, and neck surgeries and even start using a cane. Filed a claim against the IT company for the bodily injuries on their premises.
Read more: What is Property Insurance?
The jury found the company responsible for the fall and awarded the telephone repairman seven lakhs for the injury caused.
The IT company, however, had commercial general liability insurance with a limit of rupees 5 lakhs. Fortunately, the company had even purchased an umbrella insurance coverage.
Due to the extended coverage offered by the umbrella policy, the IT firm was able to cover the additional amount of two lakhs to the telephone repairman.
Thus, protected ‘Intelligent SoftTech’, against the uncovered claim by its general liability insurance limit. The policy also helped the company to cover the additional defense and attorney fees associated with the claim.