Almost everyone understands the basic concept of insurance and the needs it is used to fill such as protection and risk coverage on property, health and life itself. Auto insurance is probably the most familiar to everyone since most people start driving at an age before they need to understand such insurance coverage as health and homeowners. However, there are lesser known types of insurance policy provided by your local Memphis insurance agent like the umbrella policy.
Umbrella policies are utilized for a variety of reasons but most often, umbrella policies are used as a way to fill gaps in insurance coverage and extend the limits of standard policies once their maximums are reached. A small business owner is an excellent example of someone that would benefit from having this type of policy in place. Most business owners are required to have certain levels of general liability insurance in place to comply with local laws and requirements for operation a business. I fact, most municipalities will not issue a business license until general liability insurance has been purchased and in force.
In many cases, having a standard general liability policy is not enough coverage to protect the interest of the business. In order to extend coverage, business owners often purchase an umbrella policy to fill the gaps often left by general liability policies. Memphis insurance agents council clients on the benefit of owning an umbrella policy and how it can protect them in the event an unfortunate event occurs that could result in devastating effects on their business. In today’s society, litigation ties up the courts and is big business for lawyers and law firms. An umbrella policy in place over and above a general liability insurance can provide the peace of mind a small business owner needs.
Parents of teenage drivers are also excellent candidates for umbrella insurance. Teenage drives are more susceptible to car accidents and place their parents assets at risk should they become involved in an auto accident. Automobile insurance polices have per occurrence minimums which can place parents at risk should liability resulting from a car accident exceed policy maximums. An umbrella policy will takeover once basic automobile insurance ends, giving parents added protection and out of pocket losses.
As with anything financial and involving assets, evaluation of current risk and needs should be considered. A meeting with a financial advisor should be sought first as they are qualified to evaluate financial matters. Once a meeting with a financial advisor is completed, a meeting with you local Memphis insurance provider can determine how to best protect your assets. Standard homeowners, auto insurance and life insurance policies may be enough. However, in the event standard polices do provide enough protection for potential risk incurred, an umbrella policy may be needed to cover the short fall in basic coverage.
Umbrella insurance policies cover claims for accidents or damages that were caused by you or members of your family. An umbrella policy is unique in the sense that benefits will not be paid until the limits of standard liability policies such as homeowners and auto insurance policies max out. We will use an example of a homeowners policy to illustrate how a umbrella policy would be beneficial and provide needed protection. If your homeowners policy with liability provisions of $350,000 and a claim or judgment by the courts for liability exceeded $350,000, the umbrella policy would pay claims once the $350,000 general homeowners policy is exceeded. The umbrella coverage would pay claims up to the amount of the policy limits selected when the policy was purchased, for example,$1,000,000. If a claim were to be made for $750,000 against the insured, the homeowners policy would pay up it’s limits of $350,000 and the umbrella policy would payout the remaining $400,000 of the claim.
When a umbrella policy is purchased, the insured is increasing higher liability limits that they would otherwise receive from their standard coverage. Having an umbrella insurance policy in force can provide the added protection needed to fill gaps over and above your standard insurance coverage providing the security you need. By visiting your local Memphis insurance agent or broker, you can learn more about liability insurance and specifically, umbrella insurance.