With umbrella liability insurance coverage, the insurance company is obligated to pay the legal costs of a consultant in a covered liability claim or lawsuit. This policy acts as a additional layer of coverage above the General Liability and or Professional Liability policy.
So if a claim is paid under the General Liability policy for $500,000 yet the total damages are $750,000, the Umbrella policy would pay the extra $250,000. An Umbrella policy provides added peace of mind that comes from knowing extra protection is in place. Umbrella policies are ideal for businesses that have significant assets that could be risk in the event of a large legal settlement.
Covered liability claims include bodily injury, property damage, personal injury, and advertising injury (damage from slander or false advertising).
The insurance company also covers compensatory and general damages. Punitive damages aren’t covered under general liability insurance policies because they’re considered to be punishment for intentional acts. Therefore punitive damages would not be covered under an Umbrella policy either.