Imagine that you cause a bad accident and the jury awards the plaintiff $1 million. Your insurance company pays out the policy limits of $300,000. You are personally responsible for the other $700,000. You may wonder what your next steps should be. Without an umbrella insurance policy, bankruptcy and losing your personal assets may be the only option.
Umbrella policies serve as an extra level of coverage and can cover a range of various other insurance policies such as homeowner’s insurance and car insurance, including coverage for both liability and uninsured motorists and underinsured motorists. If you want to know more about umbrella insurance policies and family exclusion clauses in Toledo speak with a distinguished car accident attorney who can help.
What Are Umbrella Policies?
Umbrella policies kick in to protect an individual’s assets in the event that their other liability policies get maxed out. They are typically sold in $1 million denominations and can be inexpensive. An umbrella policy essentially provides a broader insurance coverage range with higher liability limits—in other words, if someone gets sued for more than what their primary limits allow, their umbrella policy will kick in and cover the extra expenses.
Primary policies generally cover bodily injury and property damage, but an umbrella can also include personal injury, property damage, or bodily injury caused by an individual, their pets (as in a dog bite case), or other people on their policy.
How Umbrella Policies Actually Work
A typical umbrella policy does not have a deductible and will kick in immediately once an individual’s other insurance policies are exhausted. For example, consider that someone has a $500,000 auto liability policy and a $2 million umbrella policy. Imagine that an individual causes an accident injures a family, and has a $2.5 million judgment rendered against them.
In this scenario, the first thing that will happen is that the person’s auto insurance company will pay out the $500,000 liability limits. After their auto insurer makes this payment, the umbrella carrier will kick in and cover the remaining $2 million.
Having this umbrella policy in place could prevent someone from having to declare bankruptcy. For this reason and many others, it is an excellent idea to buy both a liability umbrella and an uninsured motorist/underinsured motorist umbrella policy. Individuals can oftentimes add a $1 million umbrella on top of a $300,000 liability policy for as little as $40 per vehicle per year. Knowing about umbrella insurance policies and family exclusion clauses in Toledo can ultimately end up saving a person thousands, and sometimes millions of dollars.
Family Exclusion Insurance Clause
Most people buy full coverage insurance thinking that they are getting coverage for all negligent driving – even if it is their family member who negligently causes the accident. However, this is not always the case. Some automobile insurance policies contain an exclusion known as the family, household, or intra-family exclusion. A family exclusion is a clause stating that the insurance company won’t pay for a family member’s death or injuries if another family member causes the accident.
This exclusion essentially limits the bodily injury liability coverage available to family members who are injured as a result of the negligence of another family member. The purpose of the family exclusion is to prevent two insured family members from colluding to take advantage of the insurance system. However, the family exclusion means that an auto accident that is their fault and can leave someone’s family with limited or no coverage.
The family exclusion can be difficult to understand. If the automobile insurance policy one parent bought had a family exclusion, their children are not entitled to any of the $100,000/$300,000 liability or UM/UIM coverage that was purchased. Rather, the kids are only entitled to receive $5,000 per person medical payments coverage for a total of $15,000. The family exclusion in an otherwise full coverage auto insurance policy can leave an individual and their family open to devastating financial liabilities after an auto accident.
Contacting an Attorney
To ensure that your specific policy meets your coverage expectations, you should ask your insurance agent if your policy contains a family exclusion, and if so, you should consider purchasing additional coverage to ensure that your family members are covered for bodily injury. Communicating with your insurance agent is one way to ensure you do not get caught up in a threat to your family’s financial future.
If you have been found negligent in a car accident, you could end up owing thousands, or even millions, of dollars to the plaintiff. Insurance often does not cover all expenses which is why umbrella policies are so important. Umbrella insurance policies and family exclusion clauses in Toledo can help you avoid bankruptcy, and can ensure that your assets are protected. Talk with a reputable insurance agent to see just how affordable an umbrella policy can be. Be proactive, and contact a car accident attorney if you have any questions.