What Does an Umbrella Insurance Cover?

An umbrella insurance policy is an extra liability coverage. To understand what the policy does and doesn’t cover, you have to know all the underlying insurance plans. This policy is designed to offer protection from major lawsuits and claims, hence protecting your assets and finances. This is accomplished in two ways:

  • It offers extra liability coverage above your auto, homeowner’s, boat, motorcycle, and RV policy limits.
  • It gives protection for the claims excluded by other liability plans such as slander, false arrest, libel, as well as liability coverage on any owned rental units.

This coverage will provide an expanded protection over the policies you currently have and is given by insurance providers like Schaller & Thomas Family Insurance in Peoria, AZ. So, in case you are involved in a car accident and the expenses exceed your policy limits, the umbrella plan kicks in to pick up the extra difference. However, if you are involved in an accident because of doing something unlawful, the illegal action will void both your auto and umbrella policy.

When it comes to homeowner’s insurance policy, liability insurance can have some exclusions like failing to provide coverage if you keep a breed of dogs that are considered dangerous. In case you purchase the plan, and then your dog bites someone, you’ll not get compensation. What’s more, your umbrella policy won’t help you either, just like the homeowner’s policy.

Although most umbrella plans also exclude items excluded on your underlying coverages, there may be some exceptions. For instance, if you have a home business, you may not know that your business coverage isn’t part of the homeowner’s insurance plan. If a customer comes to your home and gets injured, you won’t get the required protection. But, your umbrella insurance carrier may extend the additional business protection options to you.

How to qualify

To qualify for an umbrella policy, you need to have the required insurance plan limits for liability on all the underlying policies. You also need to meet the limit requirements as set by the insurance carriers.

It’s important to get umbrella insurance, so consider contacting Schaller & Thomas Family Insurance that serves the Peoria, AZ area for more information.

 

 

Factors affecting vehicle sales, insurance and repairs

By Patricia L. Harman

March 7, 2018

PropertyCasualty360

Artificial intelligence, emerging technologies and changing consumer expectations are just some of the issues impacting auto sales, insurance and repairs according to the 2018 Crash Course study from CCC Information Services, Inc.

With 17.25 million vehicles sold in 2017, slightly down from 2016, the 2% increase in average vehicle prices to $36,113 meant it was still a strong year for manufacturers. Higher vehicle costs also means increased insurance premiums, leading insureds to opt for higher deductibles should they be involved in an accident. According to the CCC report, 19% of all collision claims had a deductible of $500 or more, although the average repair generally costs significantly more than the deductible.

Auto technology improves

Manufacturers are working towards greater “vehicle connectivity, vehicle autonomy and vehicle electrification, powered by advancements in computer power, machine learning and artificial intelligence,” said Susanna Gotsch, Crash Course author and lead analyst for CCC. “Our industry has never moved faster or been so exciting. Advances in digitization, artificial intelligence, the internet of things, and sensor and camera technology are driving dramatic changes and improvements in automotive technology.”

Connected vehicles are enabling vast amounts of information about a vehicle’s health, driving data (the vehicle and driver’s), performance, as well as vehicle-to-vehicle data to be collected by manufacturers, insurers and other parties. Some of the information can help insurers with more accurate policy underwriting.

SMA research anticipates that 70% of all auto insurers will be using telematics by 2020. The benefits include a shorter delay in filing the first notice of loss with an insurer, since crash data could conceivably be sent to the insurer, first responders (in the event of bodily injuries) and to the repairer.

Technology usage in other areas has affected policyholders’ expectations for the insurance industry. Like online retailers who provide constant updates when packages have been dispatched, are en-route and will be delivered, insurers and repairers are expected to provide similar information to policyholders about their claims. Recognizing the importance regular communication has on customer satisfaction ratings, multiple insurers are utilizing programs to provide policyholders with regular updates on their claims status.

The ups and downs of ride-sharing

As the use of ride-sharing increases, so does the number of vehicles on the road and miles driven. The Institute of Transportation Studies at UC Davis studied ride-hailing in seven U.S. cities and found a 6% drop in the use of public bus transportation and a 3% drop in light rail use.

In New York City, increased ride-sharing usage accounted for declines in the use of taxi and private car services. For business travelers, ride-sharing now accounts for 65% of the ground transportation costs according to the Center for Automotive Research, while taxis only account for 7% and car rentals for 28%. Even airports are reporting a major drop in fees from parking, car rental companies and taxis.

Auto repair costs climb while collision severity drops

The increased use of advanced driver assistance systems (ADAS) such as front crash prevention, blind spot detection, lane departure warnings, park assist, obstacle detection and back-over prevention is having a positive impact. While these technologies are not mandated by the National Highway Traffic Safety Administration (NHTSA), the Insurance Institute for Highway Safety (IIHS) and NHTSA announced in 2016 that 20 major auto manufacturers had voluntarily committed to making front crash prevention systems standard on most models (approximately 99%) by 2020.

Studies by the Highway Loss Data Institute (HLDI) and IIHS have found that vehicles equipped with forward collision warning systems have reduced rear-end collisions by 23%, and accidents involving vehicles with automatic emergency braking dropped by 40%. The CCC report finds that in addition to fewer accidents, these systems may also help reduce the number of incidents involving cyclists and pedestrians.

While these technologies have shown promise in reducing the number and severity of accidents, the cost to repair vehicles continues to rise. CCC said the average cost for a repair increased 2% in 2017 to $2927. Repair costs for non-comprehensive losses ran 2.3% higher in 2017 than the previous year, with costs for current model vehicles running slightly higher at 3.7%. Costs to repair vehicles that were one to three years old increased 3%.

However, there is a significant difference in repair costs depending on the age of a vehicle. Average repair costs for new vehicles compared to older ones increased from 47% to 69% over the last five years. “Dollars for replaced parts as a share of total repair costs and the average number of replaced parts per claim have increased — particularly for newer vehicles,” said Gotsch in her report.

The increased use of driver assistance technologies can help mitigate or even prevent accidents, but like cell phones and other technology, they will also change driver behaviors. For insurers, this could also mean changes in liability and the types of insurance coverage required for a vehicle. The actual repair costs, while higher, could be offset by fewer overall accidents, which would have a long-term impact on parts suppliers and repair shops as well. The changes for all are probably coming more quickly than anyone expects.

What is Umbrella Insurance?

In the insurance world, an umbrella policy is an added layer of personal liability protection. Without a boring insurance lesson that will leave you falling asleep at your desk, here is a simple breakdown. You’ve seen personal liability on your home and auto insurance; it is the coverage that protects you financially and covers third party injuries.  An umbrella policy is an additional limit that kicks in once those primary limits are exhausted.

How Does an Umbrella Policy Work?

On a homeowners policy, liability provides coverage if someone were in your home, tripped and fell down your stairs. It’s the bucket of money that would cover the injured party’s medical expenses and so on. Now if you have a pool in your backyard, you have a greater risk.  Let’s say you were hosting a birthday party for your son. During the party, your neighbors’ daughter fell into the pool, drown and had to be airlifted to the hospital. Your underlying liability coverages of $100,000, $300,000 or even $500,000 would not be enough to cover the exorbitant medical costs associated with this accident. You would have to make up the difference out of your pocket, and possibly in a lawsuit.

However, if you were carrying a one million dollar personal umbrella, once those underlying limits were exhausted the umbrella limits would kick in and cover the costs you may be liable for up to the limit of the policy.

In a car accident scenario, the umbrella policy would work the same. Most auto limits you see are in increments similar to $50,000/$100,000/$50,000. The first number represents the amount of liability per person per accident, the second represents the limit of liability paid total per accident, and the last number represents the amount paid towards property damage.

Let’s say you were driving down the highway, and an unfortunate sneezing attack started that caused you to veer over into oncoming traffic, causing a multi-car accident, if you only had the above limits on your auto policy, it most likely would not cover everyone that claimed damages. This means you would be held financially responsible for the remaining balances and could be on the wrong end of a lawsuit. However, if you purchased an umbrella policy, you would have another bucket of money to grab from and cover those additional injuries.

If you think you want to discuss your options for an umbrella policy in Peoria, AZ the knowledgeable agents at Schaller & Thomas Family Insurance are here to help.  Call or email us today.