Umbrella liability insurance is a type of insurance coverage that goes above and beyond what is considered the usual and standard coverage for liability. Often selected as an option by corporations, umbrella liability insurance provides a level of protection that can come in very handy in extreme situations that would impede the ability of the company to continue operations. As with many forms of insurance coverage, umbrella liability insurance coverage will often include some type of deductible that must be met, as well as some amount of self-insured retention.
As far as the actual function of umbrella liability insurance, the coverage will follow the same basic procedures associated with most types of liability insurance. In order to receive some sort of compensation from the coverage, the insured party will need to submit an insurance claim. Insurance claims are received, and evaluated to determine if the contents of the claim are in compliance with the terms of the policy. If the insurer decides that the claim is valid, compensation is approved and forwarded to the insured.
One thing to keep in mind about umbrella liability insurance is that it is not a replacement for standard liability coverage. Generally, an umbrella liability insurance policy is written to pick up where standard liability coverage leaves off. This means that before submitting a claim on an umbrella liability policy, a claim should be submitted to the standard liability provider. Any outstanding balance that is not covered by the standard policy can then be submitted to the umbrella provider for consideration.
While most jurisdictions require that a business carry basic liability coverage, umbrella liability insurance is optional. For some companies, the cost associated with this additional insurance may be cost prohibitive. Still, many companies have found that the added protection provided by these types of policies are well worth the investment. Umbrella liability insurance can provide additional peace of mind for all persons involved with the company, as well as strengthen the overall stability of the corporation.
