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Umbrella Excess Liability Insurance: What is it, What Does it Cover, and Who Needs It?

As the name implies, umbrella excess liability insurance covers anything that a regular policy or set of policies doesn’t cover. It’s fast become a necessity in many cities and industries and can play a vital role in protecting investments, business assets, and more.

Umbrella excess liability insurance does not replace general liability insurance, home insurance, auto insurance, and other policies; in fact, it cannot be purchased unless one has other relevant forms of insurance. Furthermore, there is often a base insurance coverage minimum that one has to meet before acquiring umbrella coverage. Rather than acting as a stand-alone policy, excess liability coverage provides additional compensation and funding if and when a policy reaches its limits, but there are additional, qualifying expenses that need coverage. Businesses of all sizes and in just about all industries can benefit from this type of coverage, as even a slip-and-fall accident can result in a claim for compensation that far exceeds a business’ general liability insurance policy; however, businesses in upscale areas with wealthy clients are more likely to require this form of coverage due to the increased risk of lawsuits. Freelance business professionals will also want this coverage, especially if they work in a field with a high likelihood of costly claims. Such professions include the legal industry, accounting, the medical industry, public service, children’s coaching, and instructors for potentially dangerous sports such as skiing and swimming.

This form of coverage also covers reputational loss due to libel, slander, and/or invasion of privacy. Individuals who write product/services reviews on a regular basis will want to seriously consider this form of coverage, even if they are not writing reviews in a professional capacity. Recent statistics show that about 78% of consumers trust online reviews as much as a word-of-mouth recommendation from a friend or relative, so it’s not surprising that some business owners are taking drastic measures to protect their online reputation. Even a consumer who ultimately wins his or her lawsuit or has the lawsuit tossed may face tens of thousands of dollars in legal bills without proper coverage.

Landlords likewise can benefit immensely from umbrella excess liability coverage. If a serious accident occurs on a property, a landlord can be sued by a tenant who feels that the accident was due at least in part to the landlord’s failure to maintain or repair the property. If the property has a pool and/or trampoline that has been installed by a landlord, the risk of lawsuits is amplified, as these amenities can cause seriously injury or even death if misused. Landlords can also be sued for denying a rental application if the applicant feels the denial was discriminatory in nature.

Umbrella excess insurance coverage may not be as well-known as other forms of coverage, but it can spell the difference between financial stability and ruin for many people. A whopping 40 million lawsuits are filed in the United States every year, and even honest individuals who are trying to protect their customers, tenants, and those they worked with can be hit by a lawsuit if a mistake, accident, or other unfortunate event occurs. With excess insurance coverage, one can have peace of mind knowing that needed funding is provided to cover legal costs and, if necessary, the cost of a settlement.