An umbrella policy, or excess liability, is additional protection in the case that a judgment against you exceeds the liability limits of your existing auto or homeowners policy. Excess liability coverage increases your personal liability limits by adding extra protection to your current auto, boat or homeowners policies. Depending on the type of accident, your homeowners, auto or boat policy liability limits are used up first, then the excess liability policy covers all remaining costs, up to the amounts of coverage you purchased. Business umbrella liability insurance works the same way, it provides the extra protection you need to mitigate risk. Should someone file a lawsuit against your company, your umbrella policy will take effect when your existing liability insurance limits are exceeded.
Take for example this recent lawsuit: A MA jury has ordered Toys ‘R Us to pay more than $20 Million to the family of a woman who was killed when an inflatable pool slide partially collapsed at a 2006 party. The slide was found not to have been tested to determine if it met certain safety standards. Without an umbrella, Toys ‘R Us would only be covered for up to their liability limit, likely only a few million dollars.
Here’s the article: http://www.insurancejournal.com/news/east/2011/10/18/220480.htm
Want to learn more about Umbrella policies? Call us: 781-444-3050