What Is Excess Coverage?
Excess coverage, also known as umbrella insurance, is a type of insurance policy that provides coverage beyond the limits of other policies. It is a form of liability coverage that will pay when other policies have been exhausted. Excess coverage is designed to provide protection from claims and lawsuits beyond the limits of a primary policy, such as a homeowners or auto insurance policy.
Excess coverage is a supplemental policy that kicks in after the limits of the primary insurance policy have been exhausted. It is used to protect the insured from a claim or lawsuit that exceeds the limits of the primary insurance policy. For example, if a person is involved in an auto accident that causes $500,000 in damages, and his auto insurance policy has a limit of $300,000, the excess coverage will pay the remaining $200,000.
Why Do People Need Excess Coverage?
Excess coverage is important for people who want to protect their assets. Without excess coverage, a person’s assets are at risk if they are sued or if they are liable for damages caused by an accident. Excess coverage can also provide protection from claims that are not covered by a primary policy, such as libel and slander.
Excess coverage can also be important for business owners. Businesses often face a greater risk of lawsuits due to their activities, and excess coverage can provide financial protection in the event of a lawsuit or claim.
What Does Excess Coverage Cover?
Excess coverage can provide protection from claims and lawsuits that exceed the limits of a primary insurance policy. It can also provide protection from claims that are not covered by a primary policy, such as libel and slander. In addition, excess coverage can provide protection from punitive damages, which are damages awarded to punish a person or company for particularly egregious behavior.
Excess coverage can also provide protection from claims that arise out of a business’s operations, such as product liability or professional liability. It can also provide protection from claims arising out of the activities of employees, such as discrimination or wrongful termination.
How Much Does Excess Coverage Cost?
The cost of excess coverage varies depending on the type of coverage and the limits of the policy. Generally speaking, excess coverage is relatively affordable, with policies typically costing between $200 and $500 per year. The cost of excess coverage can also vary depending on the type of business and the number of employees.
It is important to note that excess coverage is not a substitute for a primary insurance policy. It is intended to provide additional coverage beyond the limits of a primary policy. Therefore, it is important to purchase a primary policy with sufficient limits before purchasing excess coverage.
What Are the Benefits of Excess Coverage?
The primary benefit of excess coverage is that it provides financial protection from claims or lawsuits that exceed the limits of a primary policy. It can also provide protection from claims that are not covered by a primary policy, such as libel and slander. In addition, excess coverage can provide protection from punitive damages, which can be significant in some cases.
Excess coverage can also provide peace of mind. Knowing that you have additional coverage in the event of a claim or lawsuit can provide a sense of security, especially for business owners who face a greater risk of lawsuits.
What Are the Drawbacks of Excess Coverage?
The primary drawback of excess coverage is that it only kicks in after the limits of a primary policy have been exhausted. Therefore, it is important to purchase a primary policy with sufficient limits in order to ensure that the excess coverage will provide adequate protection.
In addition, excess coverage may not provide protection from all claims or lawsuits. For example, some policies may not provide coverage for certain types of claims, such as libel and slander. Therefore, it is important to read the policy carefully to ensure that it provides the desired level of protection.
Conclusion
Excess coverage is an important type of insurance policy that provides protection from claims and lawsuits beyond the limits of a primary policy. It can provide financial protection from claims or lawsuits that exceed the limits of a primary policy, as well as protection from claims that are not covered by a primary policy. It can also provide protection from punitive damages, which can be significant in some cases.
Excess coverage is relatively affordable, with policies typically costing between $200 and $500 per year. However, it is important to purchase a primary policy with sufficient limits before purchasing excess coverage, as it only kicks in after the limits of the primary policy have been exhausted.
It is also important to read the policy carefully to ensure that it provides the desired level of protection. Excess coverage can provide peace of mind and financial protection in the event of a claim or lawsuit, and it is an important consideration for any individual or business.