Excess Liability insurance is commonly referred to as Umbrella Insurance. This is another layer of protection after your auto, homeowners, renters, landlord, & other personal policy liability limits have been depleted.
Property Losses are capped at property's worth - Liability Losses have no limit.
Examples
Assume you have an auto policy with $100,000 of Property Damage limits, and say you cause an auto accident. You total the other parties' cars which are worth a total of $190,000. However, your property damage limits are only up to $100,000. Normally, you would have to pay the excess $90,000 out of your own pocket. However, if you have an umbrella policy, this will kick in and cover you.
Now, let's say you have a Rental Property. Due to electrical wiring malfunction, a fire is caused which causes 3rd Degree Burns to your tenants. The tenants sue you for the physical damage they have endured as well as the mental anguish and loss in wages as a result, totalling $1,000,000. Your Rental Property Insurance policy has only $300,000 in Liability coverage, leading to you having to foot the rest of the bill.
In the State of Georgia, Court Rulings can leave your wages garnished for up to 25% of your disposable income.
It is common to have your auto and homeowners policies with the same carrier in order to qualify for an umbrella policy. Also, you must have certain underlying liability coverage limits for your auto and homeowners policies. Those limits tend to be $250,000/$500,000/$100,000 for auto and $300,000 on your property policies.
Be wary: some insurers, like Allstate, do not offer Umbrella Coverage on Landlord properties.
Take a look at the following video from our insurance partner, Travelers Insurance, summarizing the benefits of an Umbrella Policy.
Fenix Risk Management is an independent insurance agency proudly serving families & businesses in Georgia, Alabama, North Carolina, South Carolina, Tennessee, and Florida.
Vik is an adviser at Fenix Risk Management.
Note: the opinions expressed in this blog are that of the author, not of any other individual or organization referenced.