Naperville Personal Injury Lawyer Blog
Umbrella coverage, also known as an umbrella insurance policy, provides additional liability protection beyond the limits of standard homeowner’s, auto, or other personal insurance policies. In Illinois, homeowners can purchase umbrella coverage to protect against significant claims and lawsuits that exceed the limits of their primary insurance policies. This is extremely helpful in personal injury cases, where the cost of treatment for severe injuries often exceeds the policy limits of the primary insurance policy.
Key Features of Umbrella Coverage
- Excess Liability Coverage:
- Umbrella policies provide additional liability coverage, typically in increments of $1 million. This coverage kicks in when the liability limits of the underlying policies (e.g., homeowner’s or auto insurance) are exhausted.
- Broader Protection:
- In addition to extending the limits of existing liability coverage, umbrella policies often cover claims that may not be included in standard policies, such as libel, slander, and false arrest.
- Worldwide Coverage:
- Many umbrella policies offer worldwide coverage, meaning the insured is protected against liability claims occurring outside the United States.
- Legal Defense Costs:
- Umbrella insurance typically covers legal defense costs, which can be significant in the event of a major lawsuit.
How Umbrella Coverage Works
- Primary Insurance Requirements:
- To qualify for umbrella insurance, homeowners must maintain certain minimum liability coverage on their underlying policies. For example, insurers may require a minimum of $300,000 in liability coverage on a homeowner’s policy and $250,000 per person/$500,000 per accident on an auto policy.
- Coverage Limits:
- Umbrella policies generally start at $1 million in coverage, with higher limits available for those seeking greater protection. The additional coverage applies once the limits of the primary insurance are reached.
- Example Scenario:
- If a homeowner’s dog bites a delivery driver, resulting in medical bills and legal fees totaling $800,000, but the homeowner’s policy has a liability limit of $300,000, the umbrella policy would cover the remaining $500,000 (assuming a $1 million umbrella policy).
Legal and Practical Considerations for Umbrella Coverage in Illinois
- State Regulations:
- While Illinois does not mandate specific requirements for umbrella insurance, it is governed by general insurance laws and regulations. Insurers offering umbrella policies must comply with these regulations to ensure fair practices and adequate consumer protection.
- Cost of Coverage:
- The cost of umbrella insurance varies based on several factors, including the amount of coverage, the insured’s risk profile, and the number of underlying policies. On average, a $1 million umbrella policy costs between $150 and $300 per year.
- Claims Process:
- In the event of a claim, the umbrella policy provides additional coverage once the underlying policy limits are exhausted. The policyholder must notify the umbrella insurer of the claim and cooperate with the claims investigation.
Contact the Naperville Personal Injury Lawyers at John J. Malm & Associates
Umbrella insurance provides Illinois homeowners with an important layer of additional liability protection. By extending the limits of underlying policies and offering broader coverage, umbrella policies help protect against significant financial losses from major claims and lawsuits. Homeowners should consider their risk exposure and consult with insurance professionals to determine the appropriate level of umbrella coverage.
If you were injured in an accident that was covered by umbrella coverage, contact the top-rated Naperville personal injury lawyers at John J. Malm & Associates for a free consultation. We can help you navigate the insurance process and how to access the umbrella policy to cover the expenses for your injuries.