Civil action can be taken if an accident results in serious injury or death. In the event you cause an accident, your automobile liability coverage may not fully cover all legal expenses. This is also the case if you put a swimming pool in your backyard and a child neighbor drowns.
An umbrella policy will cover this type of liability, and is designed to pay legal fees that exceed the limits in general liability insurance packages. Most auto liability insurance policies handle most expenses involving property damage and personal injury but do not cover court costs and civil actions, which can cost hundreds of thousands of dollars.
Benefits of Umbrella Coverage
In the event you are sued for damages due to an accident where you are at fault, your insurance policy will not insure these costs. Therefore, your savings account, retirement funds and paycheck can be tapped into and drained right before your eyes.
Homeowners can lose their property in a lawsuit claim. With umbrella insurance, your valuable investment is protected. This is also true for those who own other real estate, have sizable retirement or investment portfolios, or are involved in large-scale buy-and-sell transactions.
Umbrella policies are typically written in increments of $500-$1M, with policy limits reaching $10M. Depending on the policy, the insurance coverage would be honored in a civil lawsuit involving injuring, pain and suffering or court costs associated with the action itself.
There is also an additional level of liability insurance of homeowners with this type of insurance who own business, and for individuals and companies that regularly publish material in print or in the Internet. This form of coverage will protect against slander, libel and patented products.