Umbrella Insurance: What It Is and What It Covers

Everyone has heard of a lawsuit horror story that cost a family or business millions of dollars in fees and damages. Umbrella insurance policies help cover those extraordinary costs so that your clients can sleep well knowing they aren’t one accident away from insolvency. 

However, not everyone knows what an umbrella policy is or how it works. This article will address those questions while explaining what these policies cover and what differentiates them from each other so you can find one that suits your clients’ needs perfectly.  

What Is Umbrella Insurance?  

Umbrella insurance provides extra liability insurance coverage in case an underlying policy is exceeded. For instance, a restaurant umbrella policy would give restaurants additional liability coverage if their individual property or liability coverages were not enough to handle a major lawsuit or several minor ones. 

What Kinds of Umbrella Insurance Are There? 

There are all kinds of umbrella insurance policies out there. No one wants to be caught without enough coverage, so there is a myriad of umbrella liability policies to match people’s needs. 

Some of the most popular umbrella insurance policies include: 

  •  Real Estate Umbrella: Provides extra liability coverage for clients looking to insure residential (rental properties, condominiums, multi-family and single-family homes), commercial, and mixed-use properties. 
  • Community Association Umbrella: Provides additional liability limits to help protect HOAs, COAs, Co-Ops and PUDs from the costs of litigation.
  • Resort Umbrella: Offers resorts additional coverage including resort amenities and activities such as slips and falls by the pool or any other issues that may pop up while people are on vacation.  
  • Hotel Umbrella: Gives hoteliers extra piece of mind that their hotels have extra liability coverage. 
  • Casino Umbrella: Increases liability limits at casinos for incidents requiring their liquor liability or general liability policies. Coverage might also cover entertainment venues.
  • Restaurant Umbrella: Provides extra protection for restaurants for incidents like food poisoning, contamination, slips, or over-served guests.  
  • Personal Umbrella: Designed to add extra coverage on top of personal home insurance or auto insurance in case of incidents like a car accident or slips by your swimming pool.  

Chances are, no matter your client’s circumstances, there’s an umbrella policy out there for them, designed specifically for their needs. Although some companies offer more general commercial umbrella policies, they might not address your clients’ specific needs. That’s why it’s always a good idea to find specialty insurance designed with expertise and specific purposes in mind.  

How Does Umbrella Insurance Work? 

Umbrella insurance policies sit on top of existing policies and only kick into action when the initial coverage limits are exhausted. For instance, say you run a hotel with a hotel insurance package that gives you $1 million in general liability. Any lawsuits and damages that stay under that $1 million threshold would be handled by your hotel insurance. But, if a wedding goes wrong and the bride sues for $5 million, then the hotel umbrella insurance would kick in to handle everything else (up to its own limit).  

What Does an Umbrella Policy Cover? 

Every umbrella policy is a little different and what a personal umbrella will cover isn’t the same as a commercial one. However, most will cover any costs and payments related to liability suits. This can include: 

  • Personal injury lawsuits like slip and falls 
  • Claims like harassment or discrimination 
  • The costs of a legal defense 

You need to read the fine print to truly understand exactly what a specific umbrella policy covers. Most umbrella policies offer broad coverages that should handle most liability suits that a business should encounter, but that’s not true of all policies. 

What Doesn’t Umbrella Insurance Cover? 

An umbrella insurance policy isn’t a panacea — there are exclusions and things it wasn’t ever intended to cover. Generally, you can expect the following to not be covered by an umbrella policy:  

  • Property damage 
  • Theft 
  • Personal umbrellas won’t cover business lawsuits, and the opposite holds true as well 

What Determines the Costs of Umbrella Insurance? 

Umbrella insurance costs can vary a lot depending on the kind of umbrella insurance being purchased. So, providing an estimate is nearly meaningless without the specifics of the situation and request.  

However, it can be helpful to understand what these costs are based on so you can understand why one umbrella insurance quote differs from another. 

Factors that contribute to umbrella insurance costs include:  

  • The amount of coverage in the policy 
  • The location where the person or business is located 
  • Credit score or loss history 
  • The kind of umbrella insurance being bought 

The best way to find out is to get a quote. Distinguished specializes in several different kinds of umbrella insurance, including hotel, restaurant, real estate, and commercial associations. Learn more about our policies by contacting our sales team or exploring what we have to offer on our umbrella programs page.  

If you’re a broker interested in getting a quote, start by signing up with us, and then just fill in the correct application, and we’ll get back to you as soon as possible. For our express policies, the turnaround can be instantaneous and completely online; however, for our higher limit umbrellas, paper applications will need to be submitted with the required supporting documents to an underwriter. 

What Should You Look for in Umbrella Insurance Policies? 

Not every umbrella policy is built the same. You need to make sure that the policy perfectly suits the needs of the situation. Here are a couple of factors to consider when choosing: 

  • Coverage: Every umbrella policy offers slightly different coverages and exclusions. Make sure to check that what you or your client needs to have covered is in that specific policy. Distinguished has created specialized umbrella policies for just this reason — so that you or your client is covered for the things that matter most in your industry.  
  • Coverage Limits: Some insurance companies offer relatively low policy limits on their umbrella coverages. Others might be looking for limits that meet the required coverage from banks and franchisers. However, what’s most important is that your client takes into account all exposures and secure limits that will cover these exposures in the event of an incident. Distinguished offers high-limit coverage so that you can find a policy that matches your client’s needs.  
  • Application Times: Sometimes you need a quote tomorrow — or better yet, today. Our underwriters will work with you to get the policy you need written quickly, but it could take time if we don’t have the necessary documentation. For example, loss runs report and financials. 
  • Price: Price is huge for everyone. However, it’s important to look beyond the bottom line to make sure you’re getting quality coverage and service as well as an affordable price. 

Learn More About Distinguished Umbrella Insurance 

Distinguished has been a go-to expert in umbrella insurance policies in the United States. We specialize in providing umbrella insurance for hotels, restaurants, real estate, and community associations. Based on size of the account and amount of limits needed, the account could fit in either our express or high-limit umbrella options. The express products offer lower limits for smaller schedules and can be applied for online. High limit umbrella policies will need to go through an underwriter. 

If you’re a broker interested in getting a quote for one of our insurance policies, get started by registering your brokerage and then submit business either through our online broker portal or with our application forms.  

Learn more about our individual umbrella policies below: 

About Distinguished Programs

Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with specific expertise in Real Estate, Community Associations, Hotels, and Restaurants. Property and liability products are distributed through a national network of agents and brokers. Serving the same core markets and partnering with the most stable and reputable carriers, Distinguished Programs’ high-limit umbrella programs remain the clear choice in its areas of specialty for superior coverage, competitive pricing, and attentive service. Through thoughtful innovation, stemming back to 1995, Distinguished Programs fosters growth and opportunities for its brokers, carriers, and employees.

View a full list of our programs and submit business with Distinguished.

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