As a responsible homeowner, real estate investor or business owner, you buy insurance coverage to protect your personal or business assets in the event that something goes wrong. But, as we recently discussed, insurance policies do not always cover everything you expect them to, and there is always the risk that you or your business will incur a liability that exceeds the limits of your coverage.
For additional protection, many individuals and companies choose to purchase what are known as “umbrella” insurance policies. Umbrella insurance provides coverage for both (i) liabilities that are not covered by your basic insurance policies, and (ii) “excess liability” above the coverage limits in your standard insurance agreements.
The coverage limits for umbrella insurance are generally much higher than those in standard insurance policies, making umbrella insurance an important addition for any individual or business with significant assets that need to be protected.
Examples of Liabilities Covered by Umbrella Insurance
Umbrella insurance can cover legal fees and financial liability arising out of a wide variety of lawsuits. Typically, any type of suit covered by your basic policies (for example, a premises liability claim arising from a cracked sidewalk or slippery floor) will be covered, as will other common types of claims, like:
- Damage to property
- Defamation (libel and slander)
- False arrest
For businesses, umbrella insurance can be used to enhance your company’s protection against liability for “errors and omissions” and other forms of professional liability. If you own a rental property, your umbrella policy can provide enhanced protection against claims based on your tenants’ conduct as well. A key aspect of umbrella insurance is that it covers defense costs in addition to any ultimate liability – so you do not have to worry about the costs of defending a lawsuit even if the plaintiff’s claims turn out to be unsubstantiated.
How Much Umbrella Insurance Do You Need?
When it comes to protecting assets with umbrella insurance, each individual’s and company’s needs are different. Generally speaking, your coverage needs will be a function of three distinct factors:
- Your liability exposure – Everything from driving to leasing property to providing professional advice can result in a lawsuit. When evaluating your liability exposure, it is important to conduct a thorough assessment of all of the activities that may put you at risk for litigation.
- Your current assets – In the simplest terms, the more assets you have, the more protection you should consider. Your umbrella insurance coverage should be adequate to shield your current assets in the event of an incident.
- Your earning or growth potential – Will your income continue to increase over time? Are you expecting significant business growth in the years to come? In addition to protecting your current assets, your umbrella coverage should take into account your future asset cultivation as well.
Saavedra Goodwin | Broward County Insurance Claim Lawyers
The attorneys at Saavedra Goodwin provide experienced legal representation for individuals and businesses throughout Broward County, Florida. If you have questions about your umbrella coverage needs or would like to speak with a lawyer about an insurance claim, call (954) 928-9568 or contact us online to schedule a consultation today.
