You may have heard of an umbrella policy when discussing insurance. However, many people are unaware of what it actually is and how to utilize it. Because of this, umbrella policies may not be purchased or even used. When it comes to personal injury cases, it’s important to know what your umbrella policy will cover. After all, there’s no sense in having the policy if it’s not going to be of some use to you down the road. Keep reading for the basics of personal injury coverage with an umbrella policy.

What Does an Umbrella Policy Cover?

An average umbrella policy is basically an add-on to the policies you already have. This means it covers above what your normal policy covers. Bodily injury, personal injury, property damage, and landlord liability is what an umbrella policy more commonly covers. Umbrella policies don’t cover things like business losses, written or oral contracts, personal belongings, etc.

How Does an Umbrella Policy Work?

As mentioned above, an umbrella policy kicks in when your normal policy isn’t enough. It acts as a band-aid of extra coverage just in case your usual policy isn’t enough. For example, if you were in a car accident that was your fault, and the other party was injured in the incident, your normal car insurance will cover up to a certain amount. However, if something happens and the case ends up calling for more than your car insurance will cover, the umbrella policy will begin covering the amount that went beyond the coverage of your normal car insurance.


Many people think having an umbrella policy isn’t worth it. However, here is a scenario to put it into perspective. Car insurance policies will only cover so much and you can’t purchase any more than their highest limit. Therefore, the only way to get extra coverage is to go for an umbrella policy. When personal injury cases are presented, aspects such as lost wages, grief, etc. are covered outside of the cost of medical bills for the injury itself. Say you hit a doctor and he sues you for lost wages on top of everything else. You could be looking at a million-dollar payout for damages with your car insurance only covering $500,000 of that. If your insurance doesn’t cover it, the judge and jury won’t care. You will still have to find a way to put the leftover damages amount. This can result in garnered wages, loss of property, home, other belongings, and more.

Umbrella policies aren’t necessary or required by law. However, they can prove to be quite the backup in such a sue-happy world. Umbrella policies commonly can be purchased in one million increments for up to five million in coverage.

Workers compensation requirements began early in the 20th  in the United States. Every business in the United States that involves employee has to consider a workers compensation policy. Most states require employers to purchase an insurance policy to handle their obligation towards workers who are injured or due to workplace exposure.

Before the policy and insurance, workers who’d been injured or made ill on the job had to take legal action against their employers. Results were horrible since system simultaneously made it difficult for workers to obtain compensation for such injuries and exposure of employers to potentially devastating financial penalties.

Modern Compensation Insurance

Workers compensation is an insurance program set up to provide workers who were injured on the job benefits to make up for lost wages while they’re out taking care of their injury.

Some of the areas which Compensation insurance covers:

  •    Injuries caused at work, like repetitive motion injuries
  •    Injuries or loss of limbs
  •    Medical treatment
  •    Illnesses, like emphysema
  •    Rehabilitation needed so employees can return to work
  •    Lost wages (up to two-thirds of the employee’s salary)
  •    Death
  •    Liability insurance for the company for lawsuits filed by injured employees

This might look like an annoying business expense. But offering workers compensation can protect you from litigation if an employee becomes injured or sick as a result of the job. Every state but Texas requires companies to carry workers compensation insurance- either through a private insurer or the state or, the business can elect to be self-insured. The cost for workers compensation insurance depends on the industry and the provider(high-risk jobs like construction and roofing have premiums). The company’s premiums can either increase or decrease depending on the number of claims filed.

Business owners can reduce claims and lower premiums by:

Offering safety gear, accessing the safety of the work environment, providing friendly office equipment, creating a safe work environment by training all employees on workplace safety, offering updates and tips on workplace safety, getting injured employees back to work faster, Developing wellness program to encourage healthy living and fitness, which should reduce the number of employees injured on the job.

Cons and Myths

Once the worker’s compensation has been paid, it’s over with the employer responsibilities. Staying in close contact with your employee,  during the recovery phase, as a business owner you can better gauge when the employee can go back to work. Only larger business are required to carry workers compensation insurance. Not True. In many states, a company needs to have one employee to meet the requirement for workers compensation.

Type of business can also be determining factor. In Missouri, the law states that the minimum of five employees is required for minimum coverage, but if that company is in the construction industry, the minimum is one employee. Compensation fraud is not that common. Studies have shown that only 1 to 2 percent of claims are fraudulent. Insurance companies often fuel media claims.

The national price tag is around $1.2 billion annually for Compensation Insurance.

Knowing your niche and understanding every part of it will save you time and money. Here is a useful guide that can help you knowing should you buy property damage insurance.

For example, if you are in a client’s house and spill something on the carpet, then any claim against you could be covered by having property damage insurance. There where cases, where painter spill a few drops of paint on a carpet but the carpet was a piece from Harrods and the claim, was settled for over $130 000! So property damage insurance covers explicitly accidental damage to property.

What professions need property damage insurance?

Property damage can be significant in a variety of professions. Smallest mistakes can lead to big claims so if you’re a waiter or construction worker; many jobs have a requirement to provide the evidence of liability insurance as part of the qualification process. So it means that before you start a job, especially on government contracts you will have to include liability insurance before you take further participation in the role.

How property damage insurance work?

When you buy property insurance, the insurance company can provide the coverage for computers, supplies, inventory, offices and other property against damage. Sometimes, property insurance covers specific events outlined in your policy. Common covered events include:

  • Acts of vandalism
  • Weather accidents
  • Thefts

Example – let’s say a fire burn down a non-profit computer company. The company lost thousands of dollars worth of equipment. Besides, they must repair the building, furniture, etc. A property Insurance policy covers all of these expenses. As a small business owner, you might qualify for a lower Property Insurance rate if you purchase this policy together with General Liability Insurance. This insurance bundle is called a Business Owner’s Policy.

Property damage insurance vs. Property Damage liability and differences

Property Insurance covers the stuff your business owns or replace damaged items after a covered event. Liability Insurance Covers the expenses that result when things you do cost someone money. Lawsuits are standard, so you go to trial or settle the dispute out of court.

How do I Buy property damage insurance?

There is a small chance that you will find property damage insurance as a separate cover then public liability insurance. Your public liability insurance will also cover accidental injuries to both your clients and third parties, which can be just as likely as damage to property.

How is Property Damage Liability Structured?

Your limit is a dollar amount that represents the maximum amount of property damage your insurance policy will cover. It means that if you have $40,000 coverage limit, your policy will cover that amount and you will cover the rest.

The benefits of additional property damage liability Coverage:

Purchasing a higher limit of property injury liability insurance will protect your future earnings and established assets. If you accidentally go over your limit, the liability coverage may not be enough to cover the total amount of damage.

“Putting your teen in a big, boring vehicle is going to be a lot easier on the wallet than giving them the zippy small car they may want,” says Russ Rader, spokesperson for the Insurance Institute for Highway Safety (IIHS).

So, adding a teenage driver to your car insurance bundle will raise your rates, but you can control how much will they climb. Teenagers cost more to insure, and there is a reason for that! Usually, new drivers are one of the most dangerous drivers on the road, at rates several times the scale of the average driver.

Ensure your teen driver!

You should ensure all family members in the household, whether they drive your cars or not. I don’t have full custody of your child, consult insurance company. Companies have different policies regarding ensuring a teen as a single parent. Best way to approach this is that the parent with primary custody adds the new driver. A minor cannot own a property or sign contracts, without a parent’s signature or consent.

The average car insurance rate for a 16-year-old who has his or her policy is as follows, per year:

  •    State minimum coverage: $2,593
  •    Liability limits of 50/100/50: $2, 957
  •    Full coverage: $6,930

It’s better and cheaper to add teenagers to an existing policy than to exclude them, and then buy an additional car and ensure it, says consumer analyst Penny Gusner.

Think about choosing a car you can ensure at low cost

If you have a couple of cars, it can be resourceful to have your new driver assigned to a specific one, the one that’s cheapest to insure. When choosing a car, you should start with IIHS’s, which lists insurance losses by make and model for vehicles built before 2010. The vehicles with lower auto insurance losses will typically have lower auto insurance rates while providing more protection if the crash occurs.

“Bigger, faster engine costs more money to insure and more money to repair,” says June Walbert, a Certified Finacial Planner for USAA.

Having a car with a powerful engine can be a temptation to a young mind(And sometimes for an even older one), and you will probably use that kind of power. She recommends four-door sedans and crossover vehicles. Don’t overlook car Insurance discounts.

Check with the insurer to see what types of discounts for teenagers might be available.

The nationwide study done in 2010 of almost 2000 parents of teens between the ages of 15 and 19 found auto insurance costs soared an average of $800 a year just by adding a teenager to their policy.

There are good-student discounts to teens who maintain at least a “B” average. If your teen is old enough to go to college and doesn’t have a car. You’re likely to get a break on our auto insurance. That’s because the teen isn’t a regular operator. Several insurance companies offer digital monitoring devices to keep an eye on tour teen’s driving behavior.

Depending on the system installed, it might monitor specific specified behaviors like seat belt usage, speeding, hard braking, cornering and arrival and departure times.