1. Umbrella Policies
Exposure to catastrophic liability loss is no longer limited to wealthy corporations. Inflation and the willingness of the public
to sue have increased the number of lawsuits, and the size of awarded judgments. The liability coverage included in your
current insurance policies might not be sufficient to cover the court awards being made today. We recommend supplementing
your current liability coverage with an umbrella policy. An umbrella policy increases your liability coverage by an additional
one million dollars or more depending upon the limit you select.
Umbrella policies provide additional liability coverage beyond the underlying liability limits found either within your home and
auto insurance policies or your business general liability, business auto liability and workers compensation employer’s liability
insurance policies. A separate umbrella policy is needed for either personal or business purposes. Once the underlying liability
limits of your qualifying personal or commercial policies have been exhausted the umbrella policy coverage is triggered subject
to any policy exclusions.
Umbrella policies might be better referred to as Excess Liability. The term umbrella suggests an image of an insurance policy
that provides protection for all possible claims scenarios. This would be an incorrect interpretation. Typically umbrella
policies offer coverage no broader than what is provided by the underlying policy. In the event that your underlying policy
excluded coverage for a particular claim scenario there is the strong likelihood that your umbrella policy would exclude
coverage as well. In the event that there was no such exclusion your umbrella may respond subject to a deductible or self
insured retention.
Umbrella policies are conditional upon maintaining required underlying limits of liability. In the event of a claim without the
required underlying limits the umbrella policy may very well impose an additional deductible equal to the originally required
underlying liability limit.
An added benefit of umbrella policies is the possibility of additional defense costs. Once an underlying policy has been
exhausted that insurance carrier is no longer obligated to maintain a defense for the insured. If umbrella coverage is triggered,
and if defense cost are included in the policy the umbrella policy may pick up the insured’s defense where the underlying
policy left off.
If you have additional questions contact Dan Bukaty at 913.345.0440 or email dbukaty@bukaty.com.
Bukaty Companies
11221 Roe Ave., Ste. 200
Leawood, KS 66211
Phone: 913.345.0440
Toll-Free: 888.657.0440
Fax: 913.345.2608
www.bukaty.com
September 24, 2008
Keeping Your Business Informed and Prepared
Risk Management Bulletin
June 18, 2012