How Does Umbrella Insurance Handle Litigation Costs?
Umbrella insurance is designed to provide an additional layer of liability coverage beyond your standard home, auto, or other insurance policies. One of its key benefits is its ability to cover litigation costs that may arise from lawsuits against you.
When you are sued for damages, your primary insurance policy will typically cover legal expenses up to its limits. However, if the costs exceed those limits, your umbrella policy kicks in. For instance, if you are found liable for an accident that causes significant harm or damages, and the legal fees surpass your existing coverage, the umbrella policy can cover the remaining costs, including attorney fees, court costs, and settlement amounts.
It's essential to understand that umbrella insurance has specific conditions. It generally covers personal liability incidents such as accidents, false imprisonment, and slander, but may not cover certain claims like professional liability or business-related issues.
In essence, umbrella insurance acts as a safety net, ensuring that litigation costs don't deplete your finances or assets. This extra layer of protection can provide peace of mind knowing that you are safeguarded against substantial legal expenses beyond the limits of your primary insurance policies.