Umbrella Insurance is designed to increase the liability limits of your primary
policies. This would include automobile, general liability and employers liability
as provided in your workers compensation policy.
To provide this coverage, most underwriters require the following limits on your
primary policies.
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A) |
General Liability |
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Each Occurrence |
$1,000,000 |
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General Aggregate |
$2,000,000 |
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Products Aggregate |
$1,000,000 |
|
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Personal Injury |
$1,000,000 |
|
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Fire Damage Legal |
$100,000 |
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B) |
Automobile Liability |
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|
|
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Combined Single Limit |
$1,000,000 |
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C) |
Employers Liability |
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Each Accident |
$500,000 |
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Each Disease |
$500,000 |
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Each Employee |
$500,000 |
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Umbrella Liability Coverage Outline
Umbrella liability insurance provides excess liability coverage over several of
the insured's primary liability policies. Most umbrella liability policies
provide coverage that is broader than the insured's primary policies. An excess
liability policy may be what is called a following form policy, which means it is
subject to the same terms as the underlying policies; it may be a self-contained
policy, which means it is subject to its own terms only; or it may be a combination
of these two types of excess policies.
Umbrella policies have three functions:
- To provide additional limits above the each occurrence
limit of the insured's primary policies.
- To take the place of primary insurance when primary
aggregate limits are reduced or exhausted.
- To provide broader coverage for some claims that would not be covered by the insured's
primary insurance policies, which would be subject to the policy retention.
Most umbrella liability policies contain one comprehensive insuring agreement. The
agreement usually states it will pay the ultimate net loss, which is the total amount
in excess of the primary limit for which the insured becomes legally obligated to
pay for damages of bodily injury, property damage, personal injury, and advertising
injury.
Limits of Insurance
All umbrella liability policies contain an "each occurrence" limit of
insurance. Some umbrella liability policies may have a separate limit that
applies to all personal and advertising injury for one person or for the organization.
Also, some policies are written with aggregate limits for only one type of
loss. Other policies may have one or more aggregates for all losses. Umbrella
policies can be written with several different variations of the aggregate limits.
There are no standard umbrella policies.
Pay on Behalf
This is an insuring agreement used in some umbrella policies. The agreement
promises to make direct payment on behalf of the insured for those sums of money
the insured becomes legally obligated to pay because of liability imposed upon the
insured by law, or assumed under contract.
Indemnity
This is the insuring agreement clause found in most umbrella policies as opposed
to the pay on behalf of agreement. When the indemnity insuring clause is used,
the insurer will indemnify or reimburse the insured for those sums of money the
insured becomes obligated to pay by reason of liability imposed upon the insured
by law, or assumed under contract.
Self Insured Retention
The self insured retention is the amount of the loss an insured must pay before
the umbrella policy would be required to respond. The self insured retention would
only apply when a loss is excluded from coverage under the primary policy, but not
excluded under the umbrella policy.