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How Umbrella Insurance Works

How Umbrella Insurance Works

Insurance is mandatory in many situations, whether it’s auto insurance required by the state, or homeowners, flood or fire insurance required by the federal government and a mortgage lender. However, insurance is not a bad thing; it’s very desirable. It protects policyholders’ assets in case there is a natural or not so natural disaster or tragic accident.

In the context of personal injury cases, plaintiffs (injured parties) are often limited by the policy limits of an insurance policy. This is true in car accident cases, as well as accidents that occur on private and commercial properties.

When a claim exceeds the limits of an insurance policy, the injured party may decide to go after the insured’s personal assets, that is if the insured has enough wealth for the plaintiff to go after. If someone has any measurable assets and they are legally liable for an accident or wrongful death, they can be on the hook for damages that exceed policy limits. This is where an umbrella policy comes in.

What is an Umbrella Policy?

Many financially savvy individuals who understand the value of great insurance take out umbrella policies, which are personal liability insurance policies that help protect policyholders if they are liable for a claim that is more than their car or homeowner’s insurance policy. Umbrella insurance can also help people with boats by picking up where their boat’s insurance ends.

Examples of what umbrella insurance can cover:

  • You cause a four-car pileup and your auto insurance does not cover all of the accident victims.
  • Your dog gets sick and viciously attacks your friend’s three-year-old child, causing the child to receive repeated surgeries.
  • Your daughter gets in a fight with another girl at a park and breaks her nose. The other girl’s parents sue you.
  • Your high school senior throws a party while you’re out of town. One of the kids at the party drinks at your house and then gets in a drunk driving accident, injuring a couple, who sue you.

We highly recommend getting umbrella insurance for yourself, but it can also come in handy if someone else has such a policy and they injure you. If you were injured due to no fault of your own, it’s worth exploring if the at-fault party has an umbrella policy. To learn more about the various avenues for compensation, contact our Columbia, SC injury firm.

Related: Is South Carolina a Fault Insurance State?


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