Commercial Renters Insurance

Definition of an Umbrella Renters’ Insurance Policy 

Your renters’ insurance provides coverage against conventional losses, but if you face a major crisis, such as being sued for an injury that a visitor suffered inside your apartment, court costs and settlements may quickly exhaust the limits of your coverage, leaving you responsible for a large judgment. An umbrella policy serves to protect you against liabilities that exceed the normal limits of your renters’ policy, and only serves you when you reach your conventional policy’s limits.

  1. What It Covers

    • An umbrella policy is a wide-ranging policy that provides additional liability to protect you from catastrophic legal actions. Most umbrella policies are designed to provide coverage against personal injury liability, libel, slander, property damage liability and other personal liability claims. Professional insurance, such as malpractice or, if you’re a journalist, libel insurance, aren’t covered by basic umbrella policies. Umbrella policies typically begin offering $1 million in additional coverage, although companies and clients may craft policies that offer much higher amounts of coverage.

    Providing Excess Coverage

    • Your umbrella policy only activates when you reach the limits of your renters’ insurance policy. For example, imagine a visitor to your home slips on the ice on your front porch and sues you for $750,000 for personal injury and lost wages damages. If your renters’ policy only offers $100,000 in coverage, you’d be saddled with the remaining $650,000 of the judgment. If you maintain an additional $1 million umbrella policy, that policy would absorb the excess loss. In the case that you’re found liable for more than the sum of your renters’ and umbrella policy, for $1,020,000 in the example above, you’re only liable for the unpaid amount, $20,000 in this case.

    Qualifying for a Policy

    • Not everyone qualifies for an umbrella policy. You need to carry auto or renters’ insurance before you can qualify for an umbrella policy. Your policies must provide minimum amounts of basic coverage before many insurers will extend umbrella coverage to you. The cost and risk imbalance is too great for the umbrella policy if you only carry $10,000 in renters’ insurance. Umbrella policies are built using your renters’ insurance as their foundation and are frequently designed with many of the same exclusions and terms as the foundation policy.

    Deductibles

    • In umbrella policies, deductibles are frequently known as retained edges. These deductibles apply in two situations. In one, the deductible is the same as your renters’ insurance policy, and is in effect paid by your renter’s policy. The other, known as self-insured retention, occurs when a calamity that isn’t covered by your foundation policy happens. In this case, you’ll need to cover the SRI amount yourself before the umbrella policy kicks in.