Umbrella Liability Insurance

Umbrella and excess liability insurance are often used interchangeably, but they serve slightly different purposes. Both types of insurance provide additional coverage beyond the limits of underlying primary insurance policies, but they have different characteristics:

Umbrella Liability Insurance

Overview of Umbrella Liability Insurance

Umbrella Liability Insurance

  • Umbrella liability insurance provides additional coverage that extends beyond the limits of one or more underlying primary insurance policies, such as general liability, auto liability, or employer's liability insurance.
  • It offers broader coverage than underlying primary policies and may cover a wide range of liability exposures, including bodily injury, property damage, personal injury, advertising injury, and other risks.
  • Umbrella liability insurance typically has an aggregate limit, representing the maximum amount of coverage available for all covered claims during the policy period.
  • In some cases, umbrella liability insurance may include drop-down coverage, providing primary coverage for certain claims not covered by underlying primary policies.
  • Umbrella liability insurance often covers defense costs in addition to the policy limits, helping offset legal expenses associated with defending against covered claims.

Excess Liability Insurance

  • Excess liability insurance provides coverage that comes into play once the limits of underlying primary insurance policies have been exhausted by covered claims.
  • It serves as a pure excess layer of coverage, meaning it only pays for covered claims that exceed the limits of underlying primary policies. It does not provide broader coverage or drop-down coverage like umbrella liability insurance.
  • Excess liability insurance typically does not have an aggregate limit; instead, it provides coverage on a per-occurrence basis, meaning it applies to each covered claim that exceeds the underlying policy limits.
  • Excess liability insurance is often used to increase the total limits of insurance coverage available for specific types of liability risks, such as catastrophic events or high-dollar claims.

In summary, while both umbrella and excess liability insurance provide additional coverage beyond the limits of underlying primary insurance policies, umbrella insurance offers broader coverage and may include drop-down coverage, while excess insurance serves as a pure excess layer of coverage with no aggregate limit. Businesses and individuals may choose between these options based on their specific needs, risk exposures, and desired level of coverage.

Importance of having Umbrella & Excess Liability insurance

Umbrella liability insurance is important for individuals and businesses for several reasons:

Increased Liability Protection

Umbrella insurance provides an additional layer of liability protection beyond the limits of underlying primary insurance policies, such as auto liability, homeowners liability, or general liability insurance. This extra coverage can help safeguard personal assets, business assets, and future earnings from the financial consequences of large liability claims.

Comprehensive Coverage

Umbrella insurance offers broad coverage that extends to various types of liability risks, including bodily injury, property damage, personal injury, advertising injury, and other potential liabilities. It fills gaps in coverage and provides a safety net for unexpected and potentially catastrophic liability losses.

Defense Costs

Umbrella insurance typically covers defense costs in addition to the policy limits, helping offset legal expenses associated with defending against covered claims. This can include attorney fees, court costs, and settlements or judgments, providing valuable financial assistance in legal proceedings.

Financial Security

Umbrella insurance provides peace of mind by offering an extra layer of financial security against unforeseen liability risks. It helps protect personal assets, such as savings, investments, and retirement funds, as well as business assets, from being depleted by large liability claims that exceed the limits of primary insurance coverage.

Risk Management

Umbrella insurance is a valuable risk management tool that helps individuals and businesses mitigate the financial risks of large liability claims. By increasing the total limits of insurance coverage available, umbrella insurance helps protect against the potential financial consequences of catastrophic events or high-dollar claims.

Legal Compliance

In some cases, umbrella insurance may be required by contract or legal obligation, especially for businesses operating in certain industries or engaging in high-risk activities. Having umbrella insurance ensures compliance with contractual requirements and regulatory mandates, helping avoid potential penalties or legal consequences.

Cost-Effective Protection

Umbrella insurance provides cost-effective protection by offering high limits of coverage at relatively low premiums compared to increasing the limits of underlying primary insurance policies. It offers substantial financial benefits for the relatively small investment required in premiums.

Personal and Professional Reputation

Umbrella insurance helps protect personal and professional reputation by providing financial resources to address liability claims and resolve disputes in a timely and efficient manner. It demonstrates a commitment to financial responsibility and risk management, enhancing credibility and trustworthiness.

Overall, umbrella liability insurance is an essential component of comprehensive risk management for individuals and businesses, offering increased liability protection, comprehensive coverage, defense cost coverage, financial security, risk management benefits, legal compliance, cost-effective protection, and peace of mind. It helps mitigate the financial risks of large liability claims and provides valuable financial assistance in legal proceedings, ensuring the preservation of personal and business assets in the event of unforeseen liability losses.

Claim Scenarios for Umbrella & Excess Liability

Here are several claim scenarios that illustrate situations where umbrella liability insurance would come into play:

Auto Accident Liability

A policyholder is involved in a car accident where multiple vehicles are damaged, and several individuals sustain severe injuries. The liability limits of the policyholder’s auto insurance are exhausted due to the high costs of medical bills, property damage, and legal expenses. Umbrella liability insurance provides additional coverage beyond the limits of the auto insurance policy to cover the remaining costs of the accident.

Slip and Fall Accident

A visitor slips and falls on the policyholder’s property, resulting in serious injuries and a lawsuit alleging negligence. The liability limits of the homeowner’s insurance policy are insufficient to cover the medical expenses, pain and suffering, and legal fees associated with the lawsuit. Umbrella liability insurance steps in to provide extra coverage for the claim and any resulting settlements or judgments.

Dog Bite Liability

The policyholder’s dog bites a neighbor, causing significant injuries and requiring medical treatment. The liability limits of the homeowner’s insurance policy are exceeded by the medical expenses and damages claimed by the injured party. Umbrella liability insurance offers additional coverage to address the costs associated with the dog bite incident and potential legal liabilities.

Social Host Liability

The policyholder hosts a party at their home where alcohol is served, and one of the guests becomes intoxicated and causes a car accident while driving home. The injured parties file lawsuits against the policyholder, alleging social host liability for providing alcohol to an intoxicated guest. Umbrella liability insurance provides additional coverage beyond the limits of the homeowner’s policy to address the legal claims and potential damages.

Business Liability

The policyholder owns a small business and is sued by a customer who alleges negligence, resulting in financial losses and reputational damage. The liability limits of the business insurance policy are insufficient to cover the costs of the lawsuit and potential damages awarded to the plaintiff. Umbrella liability insurance offers extra coverage to protect the business assets and mitigate the financial risks associated with the lawsuit.

Defamation Lawsuit

The policyholder is sued for defamation by a former employee who claims that false statements were made that damaged their reputation and career prospects. The liability limits of the personal liability insurance policy are inadequate to cover the legal costs and potential damages awarded in the defamation lawsuit. Umbrella liability insurance provides additional coverage to address the expenses and liabilities associated with the legal dispute.

These scenarios demonstrate how umbrella liability insurance serves as a crucial financial safety net, providing additional coverage beyond the limits of underlying insurance policies to protect individuals and businesses from large liability claims, legal expenses, and potential financial losses.

Types of Businesses that need Umbrella & Excess Liability Insurance

Umbrella liability insurance is beneficial for a wide range of businesses across various industries.

Here are some types of businesses that typically need umbrella liability insurance:

Small Businesses

Small businesses, including sole proprietors, partnerships, and limited liability companies (LLCs), can benefit from umbrella liability insurance to supplement their existing liability coverage. Umbrella insurance provides added protection against the financial risks of large liability claims that exceed the limits of primary insurance policies.

Professional Services Firms

Professional services firms, such as law firms, accounting firms, consulting firms, and financial advisory firms, often face liability risks associated with providing professional advice or services to clients. Umbrella liability insurance helps protect professional services firms from potential lawsuits alleging errors, omissions, or professional negligence.

Contractors and Construction Companies

Contractors, construction firms, builders, and subcontractors operate in high-risk environments with potential liability exposures related to property damage, bodily injury, construction defects, and contractual disputes. Umbrella liability insurance offers added protection against the financial consequences of construction-related accidents and claims.

Healthcare Providers

Healthcare providers, including medical practices, clinics, hospitals, and outpatient facilities, face liability risks associated with providing medical treatment, diagnostic services, and patient care. Umbrella liability insurance helps protect healthcare providers from potential malpractice lawsuits, negligence claims, and other professional liability risks.

Hospitality and Entertainment Businesses

Hospitality establishments, such as hotels, resorts, restaurants, bars, and event venues, as well as entertainment businesses, such as theaters, amusement parks, and concert venues, often encounter liability risks related to premises liability, food and beverage service, security incidents, and guest injuries. Umbrella liability insurance provides additional protection against the financial risks of hospitality and entertainment-related claims.

Manufacturers and Distributors

Manufacturers, distributors, and wholesalers of consumer products face liability risks associated with product defects, manufacturing errors, product recalls, and product liability lawsuits. Umbrella liability insurance helps protect manufacturers and distributors from potential legal liabilities arising from product-related accidents or injuries.

Oil & Gas Companies

The oil and gas industry faces substantial environmental liability risks related to pollution, contamination, and ecological damage caused by spills, leaks, and releases of hazardous substances. Regulatory requirements, such as the Clean Water Act, Clean Air Act, and Resource Conservation and Recovery Act, impose strict standards for environmental protection and require companies to bear the costs of cleanup and remediation. Umbrella liability insurance helps protect oil and gas companies from the financial consequences of environmental liabilities and legal claims.

Retailers and E-commerce Businesses

Retail stores, e-commerce businesses, and online retailers face liability risks related to premises liability, product liability, cyber liability, and customer injuries or accidents. Umbrella liability insurance offers added protection against the financial risks of retail-related claims and lawsuits.

Real Estate Professionals

Real estate agents, brokers, property managers, and real estate developers encounter liability risks associated with property transactions, leasing agreements, property management services, and construction projects. Umbrella liability insurance helps protect real estate professionals from potential legal liabilities arising from real estate-related transactions or disputes.

Transportation and Logistics Companies

Trucking companies, freight carriers, delivery services, and logistics providers operate in high-risk industries with potential liability exposures related to traffic accidents, cargo damage, property loss, and third-party injuries. Umbrella and excess liability insurance are crucial for transportation businesses to protect against the financial risks of catastrophic events or high-dollar claims.

Environmental Services and Waste Management Companies

Businesses involved in environmental remediation, waste management, hazardous waste disposal, and pollution control face significant liability risks related to environmental contamination, property damage, and regulatory compliance. Umbrella and excess liability insurance are essential for these businesses to protect against the potential financial consequences of environmental liabilities and legal claims.

Amusement Parks and Entertainment Venues

Amusement parks, theme parks, water parks, and entertainment venues operate in high-risk environments with potential liability exposures related to premises liability, ride accidents, guest injuries, and security incidents. Due to the inherent risks involved in operating amusement attractions and entertainment facilities, these businesses often require additional liability coverage to protect against large claims.

Firearms Manufacturers and Distributors

Businesses involved in the manufacturing, distribution, or sale of firearms, ammunition, or shooting-related products face significant liability risks related to product defects, accidental shootings, and gun-related injuries. Umbrella and excess liability insurance are essential for firearms businesses to protect against the potential financial consequences of product-related accidents or injuries.

Security and Investigation Firms

Security companies, private investigation firms, and security guard services face liability risks associated with security breaches, negligence claims, wrongful acts, and property damage. Due to the potential for legal liabilities arising from security incidents or breaches of duty, these businesses often require additional liability coverage to protect against large claims.

Overall, umbrella liability insurance is important for businesses of all sizes and industries to enhance their liability protection, mitigate the financial risks of large liability claims, and safeguard their assets and financial security. It provides added peace of mind by offering an extra layer of financial security against unforeseen liability risks and potential legal liabilities.

The Millward Agency, Inc. Testimonials

Hear from our clients in the automotive industry who have steered their businesses toward stability and growth with Millward Agency’s insurance solutions. Our case studies demonstrate our commitment to providing unparalleled support and protection, proving that no challenge is too big when you have the right insurance partner.

Kurtis ThorntonKurtis Thornton
18:38 16 Jan 22
Very helpful and nice people, a great place to get your insurance needs taken care of.
Christopher LymanChristopher Lyman
14:48 26 Oct 19
Finally, I don't need to ever look for another insurance agent. The Millward Agency handles my personal and business insurance. Always helpful with my questions and quick to respond to my emergencies. The Millward Agency Rocks!
Markusz SudozMarkusz Sudoz
19:03 19 Jul 19
Every time I go to my broker, Ed Caceres @ the Millward Agency, he always finds me the best insurance rates on my real estate properties. Ed is great, always extremely responsive and understanding of the industry. In the past I would go do my own insurance shopping and spend hours on hours to get the best rate, now I do not even bother shopping around I just call Ed and he always has the best pricing. In the beginning I got a quote from Ed then shopped around, now I have learned to not even waste my time. Ed @ Millward Always saves me hundreds of dollars. 110% on customer service, 100% on pricing!!! A+++
Mobility SolutionsMobility Solutions
19:09 25 Jul 18
Everybody!!!!! is Great to work with when ever I need anything which is almost monthly.Linda
carlene klebecarlene klebe
20:01 22 Jun 18
My former insurance agent and friend recommended Ed Caceres of Millward Agency. Within hours of having given Ed a call, I had quotes and was decided to go with his carrier. He was professional and answered all my questions. I’m happy to have done business with Ed and Millward Agency.
John CourtneyJohn Courtney
16:20 11 Jun 18
Business or Personal this is who you want - Personal service from their Team is amazing, treat as though you are their only client.* Business - Review policy/coverage every year. Not limited to one or two insurance providers. Recommend changes, not necessarily to save money (although it is available) provide additional coverage. Three months later our additional coverage cost $150 on a $15000 claim. For years we were not covered! They are not limited to one or two insurance providers as our previous agent.* Personal - couple of claims were handled like we were their only client. They bundled coverage in such a way to save $2100 a year for a family of four and kids in college.***Will continue to recommend to business colleagues, friends and family***
Karen CarterKaren Carter
16:01 08 Jun 18
Our company has been working with Millward Agency for many years.They have been the best insurance company I have ever worked with.The staff is always very informative and very professional. Our insurance needs which include general, auto and worker's comp are very complex. Millward is able to handle and update all of our needs at any time of the year. I really like the fact they get back to you very quickly! They are very knowledgeable and caring we never think of going elsewhere. We will definitely be customers for years to come. Thank you Millward Agency!
Chad StottChad Stott
17:56 07 Jun 18
Wade and the Millward team have been consistently reliable, prompt, knowledgeable and a pleasure to work with. Wade and his crew have guided us through our ever growing needs and we attribute our success to the partnerships we have forged with organizations like The Millward Agency. We look forward to many more years working together.
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