Personal Umbrella Liability Answers

What is a personal umbrella liability policy?

The personal umbrella liability policy is an insurance contract designed to accomplish two goals. First, it increases the liability protection beyond what the policyowner already has in his or her homeowners and automobile insurance policies. Second, the personal umbrella policy is designed to fill in the gaps in a policyowner's liability coverage since several types of liability exposures exist that are not covered by automobile and homeowners policies. Together with homeowners and automobile insurance policies, broad personnel liability protection is attained through the purchase of a personal umbrella policy.

How do I know if I need a personal umbrella liability policy?

It used to be that the only people who needed personal umbrella liability policies were wealthy individuals who had sizable amounts of personal assets that would be at risk in a lawsuit. However, in our very litigious society, many people are realizing that they have a need for more liability insurance than what is provided under their homeowners and automobile insurance policies. The personal umbrella policy is ideally suited to provide this protection.

What coverage is provided in the typical personal umbrella liability insurance policy?

Before we discuss the contents of the typical personal umbrella liability (PUL) insurance policy, it should be noted that these contracts can vary substantially from one insurance company to another. Therefore, when you are comparison shopping, you should determine the extent of the liability protection provided under each PUL policy under consideration. That being said, there are a number of common characteristics in most PUL insurance policies. First, PUL policies only pay liability claims when the policy limits on the underlying insurance policy are exhausted. For example, suppose you are found negligent in an automobile accident and the court requires you to pay damages of $500,000. Your PUL insurance policy will only pay that portion of the $500,000 that exceeds the policy limit in your private passenger automobile insurance policy. The second defining characteristic of a PUL insurance policy is the broad coverage that is provided. A PUL policy not only provides liability insurance in excess of the policy limits of the underlying insurance coverages, but it also provides liability coverage for losses which are not covered in any underlying insurance. For example, libel and slander are two perils that are not covered in the typical homeowners insurance policy for which coverage is provided in most PUL insurance policies.

These questions and answers are provided for users' general information. Although we make every effort to insure accuracy in the information provided, we cannot make any guarantees as to this accuracy. We urge you to consult your lawyer, accountant or tax advisor for specific legal or tax advice.