What is Umbrella Insurance?
Dr. Ronald J. Trevisani
Dr. Ronald J. Trevisani is a Board Certified Oral and Maxillofacial Surgeon, Pharmacist, and an Attorney. As a Resnik Institute faculty member, he has a passion for teaching clinical dentistry as well as advising dentists from a legal perspective on protecting their assets.
What is Umbrella Insurance?
Umbrella insurance is a supplementary insurance policy extending beyond your traditional personal auto and homeowners insurance policy. If a claim is made against you and that claim exceeds your insurance policy limits, then the umbrella policy may make up the amount beyond your traditional insurance maximum. This supplemental umbrella policy is an extra layer of protection against an unanticipated event. Generally, you must have traditional auto or homeowners’ insurance coverage, then add an umbrella policy as an additional source of protection.
How does an Umbrella policy work?
Traditional auto and homeowners’ insurance will cover the initial damages up to the maximum coverage allowed; then, the umbrella policy is utilized. For example, you may have someone slip and fall at your home, rental property, or dental office, and the claim against you is made for $500,000. This claim may be for medical bills, pain and suffering, property damage, etc. Your homeowner or commercial policy may cover only $350,000 worth of coverage. The traditional policy will cover the $350,000 maximum, and the umbrella policy will cover the additional $150,000. Without this umbrella policy, you may have to provide $150,000 from your personal funds. This places your personal funds at risk, which is not ideal from an asset protection standpoint.
The Umbrella policy does not cover all expenses.
The traditional umbrella policy covers what your auto or homeowners’ policy routinely covers. Property damage you or your dependents cause and bodily injuries to others. The umbrella policy usually does NOT cover your injuries, damage to your property, or injuries and damage caused by intentional or criminal acts.
Common Examples of Best Use of Umbrella Policy
- An insured’s teenage son was driving, lost control of the car, and his girlfriend in the passenger seat was ejected, sustaining permanent injuries and brain damage. The passenger sued the parents and was awarded five Million dollars.
- An insured was having an anniversary party at his home, serving alcoholic beverages. A guest, while driving home, injured a pedestrian, resulting in paralysis. The claim was settled for Two Million dollars.
- Pool Parties, Trampolines, Off-Road Vehicles, and Motorboat Injuries are not uncommon; these are additional considerations for an extended Umbrella Policy.
Ronald J. Trevisani DMD, JD, RPh Oral and Maxillofacial Surgeon/Attorney