Protection against risk is an essential consideration for everyone in financial planning. For those individuals or small businesses whose assets exceed the maximum limits of their insurance policies, particularly those at risk of having lawsuits filed against them for damages to other people and their property, insurance safeguards like umbrella liability insurance are a wise investment. Umbrella policies can be constructive when there is no self-insured retention insurance as part of the underlying insurance policy.
What Is Umbrella Liability Insurance?
An umbrella liability insurance policy provides additional coverage that exceeds the limits of basic auto, boat, or homeowner’s insurance. This type of policy protects against slander, libel, vandalism, and invasion of privacy, in addition to protecting assets from potential loss in a lawsuit. An umbrella liability insurance policy benefits individuals with a high net worth or many high-dollar assets. Small businesses can also benefit from liability insurance coverage because a lawsuit with a large verdict could devastate them.
Who Can Benefit From an Umbrella Liability Policy?
Umbrella liability coverage is an attractive option to those who may find themselves at an increased risk of losing their assets in a lawsuit. Homeowners who own a dog, gun, pool, or trampoline; those who frequently host parties on their property; and coaches of youth sports are at higher risk of liability for injuries to others. Landlords also find themselves at higher risk of lawsuits. Engaging in high-profile activities such as holding a public office or serving on the board of directors of a nonprofit also increases the likelihood of being sued.
What Does an Umbrella Policy Cover?
An umbrella liability insurance policy will generally cover the following:
- Legal defense expenses
- Lawsuits involving libel, slander, defamation of character, and personal attacks
- Medical costs for others
- Funeral costs for others
- Property damage for others
- Injuries or property damage to tenants
What Is Self-Insured Retention Insurance?
Similar to the concept of a deductible, a self-insured retention (SIR) in a liability insurance policy is a set amount of money that must be covered before the insurance company pays anything toward the claim. The most significant difference between a deductible and a SIR is that the insurance company manages the claim from the moment it is filed with a deductible. Still, the individual or small business with a SIR must manage the claim to the point where it reaches the dollar amount. For this reason, a SIR is more labor-intensive but provides a lower premium and gives more control to the individual or small business.
How Does Umbrella Liability Insurance Replace a SIR?
Understanding how umbrella liability can help if there is no SIR is crucial. One of the benefits of a SIR is that it removes the deductible, enabling the individual or business to take the full value of the insurance policy. For example, a $100,000 policy with a $10,000 deductible only provides $90,000 in insurance. However, with a SIR, the insured will receive the entire $100,000 in insurance after paying the retention amount. In the absence of a SIR, the insurance dollar amount lessens. It is where an umbrella liability policy becomes even more valuable, kicking in additional funds beyond the insurance policy’s limit.
About World Wide Specialty Programs
For the last 50 years, World Wide Specialty Programs has dedicated itself to providing the optimal products and solutions for the staffing industry. As the only insurance firm to be an ASA commercial liability partner, we are committed to that partnership and committed to using our knowledge of the industry to provide staffing firms with the best possible coverage. For more information about Staffing Professional Liability Insurance or any other coverage, we have available to protect your staffing business, give us a call at (877) 256-0468 to speak with one of our representatives.