{"id":2816,"date":"2019-08-12T21:40:30","date_gmt":"2019-08-12T21:40:30","guid":{"rendered":"https:\/\/altavistainsurance.com\/?p=2816"},"modified":"2021-01-12T12:07:07","modified_gmt":"2021-01-12T18:07:07","slug":"coverage-vs-coverage-how-does-your-liability-policy-stack-up","status":"publish","type":"post","link":"https:\/\/www.altavistainsurance.com\/blog\/coverage-vs-coverage-how-does-your-liability-policy-stack-up\/","title":{"rendered":"Coverage vs. Coverage: How does your liability policy stack up?"},"content":{"rendered":"

In the event something happens to someone else your liability insurance can protect you.\u00a0<\/p>\n

If you own a home, drive a car, own a business, sell something, hire someone for a job, or other related activities, you have exposure to losses. Carrying a liability policy will provide money for damages to other parties in the event you are liable for injuries or expenses associated with a claim like investigation costs, legal representation, or other expenses.\u00a0\u00a0<\/p>\n

Liability insurance is a way to protect your lifestyle and assets from being taken in a judgment.<\/p>\n

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What would happen if someone sued you and they won?\u00a0<\/p>\n

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What if a judgment was rendered against you and it wasn\u2019t covered by your liability policy; like your homeowner\u2019s liability or general liability if you own a business?\u00a0<\/p>\n<\/blockquote>\n

You may have to liquidate assets, a lien could be placed on your properties if they are exposed, your wages could be garnished, etc. One lawsuit could completely change your lifestyle. That is why umbrella and excess liability insurance is MUST for everyone.\u00a0\u00a0<\/p>\n

Both umbrella and excess insurance are designed as an additional layer of protection above primary insurance policies, like homeowners, auto, commercial general liability, and commercial auto.<\/p>\n

Which is better?\u00a0
What type of policy do I have?
Should I purchase more insurance?<\/p><\/blockquote>\n

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Let\u2019s look at these policies and see how they stack up against each other.<\/p>\n

An umbrella policy has two types of coverage; coverage above other insurance policies (that\u2019s the underlying insurance) and coverage for liability exposures for which there is no underlying insurance.<\/p>\n

Watch this short video about the importance of umbrella insurance for your personal assets. <\/b><\/p>\n

https:\/\/youtu.be\/L3mtIEuwBy0
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According to the ISO CU 00 01 insuring agreement for coverage A,<\/p>\n

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\u201cwe will pay on behalf of the insured the \u201cultimate net loss<\/b>,\u201d in excess of the \u201cretained limit<\/b>\u201d because of \u201cbodily injury\u201d or \u201cproperty damage\u201d to which this insurance applies. We will have the right and duty to defend the insured against any \u201csuit\u201d seeking damages for such \u201cbodily injury\u201d or \u201cproperty damage\u201d when the \u201cunderlying insurance\u201d does not provide coverage or the limits of \u201cunderlying insurance\u201d have been exhausted.\u201d<\/p>\n<\/blockquote>\n

The insuring agreement adds two terms that are not seen in general liability policies; \u201cultimate net loss<\/b>\u201d and \u201cretained limit<\/b>\u201d.\u00a0\u00a0<\/p>\n

\u201cUltimate net loss<\/b>\u201d means the total sum, after reduction for recoveries or salvages collectible, that the insured becomes legally obligated to pay as damages by reason of settlement or judgements or any arbitration or other alternate dispute method entered into with our consent or the underlying insurer\u2019s consent.\u00a0<\/p>\n

\u201cRetained limit<\/b>\u201d means the available limits of \u201cunderlying insurance\u201d scheduled in the Declarations or the \u201cself-insured retention,\u201d whichever applies. Self-insured retention is the dollar amount listed in the declarations page that will be paid by the insured before this insurance becomes applicable, like a deductible, only with respect to \u201coccurrences\u201d or offenses not covered by the \u201cunderlying insurance\u201d. The self-insured retention applies for the exhaustion of applicable underlying limits.<\/p>\n

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This policy is the reigning \u201cpound for pound\u201d<\/b> champion. It combines both technique and talent to protect insureds from loss.\u00a0<\/p>\n

No matter whether it\u2019s a loss covered by an underlying policy or a loss that is not covered by an underlying policy, the umbrella insurance policy will be victorious and protect the insured.\u00a0<\/p>\n

Now, let\u2019s look at the opponent, the excess insurance policy. The first disadvantage we can see is in the insuring agreement. This policy only has one skill or insuring agreement.\u00a0<\/p>\n

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\u201cWe will pay on behalf of the insured the \u201cultimate net loss<\/b>\u201d in excess of the \u201cretained limit\u201d because of \u201cinjury or damage\u201d to which insurance provided under this Coverage Part applies. We will have the right to defend the insured against any suit seeking damages for such \u201cinjury or damage\u201d when the applicable limits of \u201ccontrolling underlying insurance<\/b>\u201d have been exhausted in accordance with the provisions of such \u201ccontrolling underlying insurance<\/b>\u201d.\u00a0\u00a0<\/p>\n<\/blockquote>\n

Again, we need to look at the terms so we can define what is covered. \u201cUltimate net loss<\/b>\u201d means the total sum, after reduction for recoveries, or salvages collectible, that the insured becomes legally obligated to pay as damages by reason of:\u00a0\u00a0<\/p>\n