A typical family can have numerous assets that need to be insured. When you have a car, home, boat or other asset that requires insurance, it’s not uncommon to seek a general homeowner’s insurance or auto insurance policy.
The coverage will suffice in most circumstances, but an umbrella policy can be added for those times when individual policies do not provide enough coverage.
What is Umbrella Policy Coverage?
Standard family insurance policies have good limits and protection, and these policies will suffice in minor accidents. If you’re in a small fender bender, insurance will be able to coverage the damages.
But in the event that you’re in a serious accident or an accident where multiple parties are involved, insurance limits can be reached rapidly.
Medical bills can be substantial for a single injured party and multiply with each additional party.
Umbrella insurance provides additional coverage on top of the standard insurance policies that your family has in place. Umbrella insurance often begins with a minimum of $1 million in coverage and increases in large increments.
The umbrella policy is able to be used for:
- Personal injury
- Personal claims, such as slander, defamation or libel
If you’re in an accident and the other party has an umbrella policy, this is good news. In the event that the auto insurance policy will not pay out all damages, the umbrella policy can ensure that you receive the full settlement amount.
In most cases, even in bad car accidents, the standard insurance policy will provide enough coverage.
But if the party being sued injured multiple parties during the accident, perhaps hitting multiple vehicles, the umbrella coverage can be a saving grace. When multiple parties are injured in a single accident, auto insurance may not provide adequate coverage.
What Happens If the Party Doesn’t Have Enough Coverage?
No one plans to be in an accident, but they happen every day. If you’re involved in an accident, you can seek damages from the opposing party. The person’s insurance policy will pay out up to the limit on their policy, but they may be held liable for the remaining damages.
For example, if the judge agrees on a $150,000 settlement and the person has $100,000 in liability insurance, they’ll be responsible for paying $50,000.
Umbrella insurance would kick in after the person’s standard insurance pays to the limit and protects the person’s assets.
If you have a boat or a vacation home, the umbrella policy would protect these assets from legal liability as long as the umbrella policy covers the total settlement amount.
Many drivers carry their state’s minimum coverage, which varies by state, but is often low. A 30/60 policy, for example, will provide a maximum of $30,000 for a single person injury, which will quickly be utilized for medical bills and doesn’t cover many settlement amounts.
Legal Representation is Key
A car accident attorney, or a personal injury lawyer, will be able to uncover assets and insurance policies a person may have. The right attorney will be able to determine a policy’s limits before the negotiation phase begins.
Knowing what policy limits exist, and the potential insurance available will allow an attorney to better understand the position you’re in for your case.
Higher settlements can be sought, with the attorney having a general idea if the settlement will be paid. If the person has an umbrella policy, it’s possible to seek compensation for all losses suffered and:
- Pain and suffering
- Lost wages
- Injuries
- Medical bills
The attorney may also look at your own insurance coverage. If you have personal injury protection (PIP) or underinsured or uninsured coverage on your policy, it’s possible to use your own policy to help pay for your injuries.
Negotiating alone with the insurance company is a guarantee of a lower settlement award. It’s always in your best interest to hire an attorney that will handle the negotiation process on your behalf. The attorney will be able to seek a settlement that is in your best interest and can negotiate with insurance companies so you don’t have to.
