Most primary insurance policies provide a sizeable amount of liability coverage, but there is often an upper limit on how much liability coverage any one primary policy will offer. Policyholders may have a few limits they can select from, but infinity usually isn’t one of the options. Massachusetts residents who’d like more liability coverage than their primary policies give can get additional protection through a personal umbrella policy.
A personal umbrella policy normally won’t have an infinite limit either. Most do, however, have high limits that can supplement primary policies’ liability protections. When a primary policy is supplemented by an umbrella policy, the primary policy may be referred to as an “underlying policy.” The umbrella policy might be called a “supplemental policy” or “secondary policy.”
(Personal umbrella policies are different from commercial umbrella policies. The two offer similar forms of protection, but personal policies do so for individuals while commercial policies are for businesses.)
Many people in Massachusetts can benefit from having personal umbrella insurance. Some examples of individuals who might want to consider this coverage include:
This isn’t a comprehensive list of everyone who may want umbrella insurance, but rather it’s a collection that showcases the many different situations where this insurance can be helpful.
Excess liability insurance is another form of supplemental liability insurance that can add to an underlying policy’s protections. Excess liability policies differ from umbrella policies in two significant ways, though.
First, umbrella policies can fill in coverage gaps because they normally have their own terms and conditions. Most excess liability policies adopt the terms and conditions of the policy they supplement and therefore, can’t fill in any gaps left by that policy.
Second, umbrella policies often supplement several underlying policies at once because they aren’t beholden to any one policy’s language. Excess liability policies frequently are limited to supplementing just one policy because they take on that policy’s language.
Many personal umbrella policies have underlying coverage requirements that must be met by primary policies. These requirements ensure that an umbrella policy is acting as a supplemental, and not a main, insurance policy. If coverage requirements aren’t fully met, a personal umbrella policy’s protections may be jeopardized.
When personal umbrella policies fill in coverage gaps, they sometimes have self-insured retentions. These generally are amounts that a policyholder must pay on valid claims before the umbrella policy will begin covering the claim. Self-insured retentions typically take the place of underlying coverage requirements when there’s no primary policy in place for a specific type of claim.
Selecting personal umbrella insurance involves more than just checking rates and comparing coverages. Policyholders must also make sure all required primary policies are also in place, and a single mistake in this step can void a personal umbrella policy’s protections.
To make sure no errors are made during the process, residents should shop for a personal umbrella policy with the help of a Dempsey Insurance agent. Our informed and independent agents can compare policies from different insurers and make sure all necessary underlying policies are in place once an umbrella policy has been selected.