Umbrella insurance is a type of personal liability insurance that provides coverage above and beyond the limits of your homeowner’s or auto insurance policies.
An umbrella policy can help protect you from costly lawsuits and other damages that may not be covered by your regular insurance.
While umbrella insurance does provide some protection for professional liability, it is important to understand that this coverage is not always comprehensive. Many umbrella policies exclude certain types of claims, such as those arising from professional malpractice. It is important to review your policy carefully to make sure you are aware of any exclusions or limitations on coverage.
Umbrella insurance is not required by law, but it can be a wise investment if you own assets that could be at risk in the event of a lawsuit.
If you are sued and found liable for damages, your personal assets could be at risk. An umbrella policy can help protect your home, savings, and other valuable possessions.
Most people are familiar with umbrella insurance as it relates to personally liability. But umbrella insurance can also be written to extend coverage to professional liability exposures. While the underlying limits for these policies are generally the same as for personal umbrella policies, the definition of “bodily injury” and “property damage” is usually much broader, and the professional liability exclusion is usually narrower in a commercial umbrella policy.
Professional liability umbrella policies are designed to protect the assets of professionals from claims arising out of their rendering of, or failure to render, professional services. These policies are also known as “errors and omissions” (E&O) insurance.
While the terms of professional liability umbrella policies vary, most policies provide coverage for sums that the insured becomes legally obligated to pay as a result of a covered professional liability claim. The coverage is usually triggered by a written demand for money or services, but some policies will respond to a mere threat of suit. The coverage is generally “claims made,” meaning that the policy will only respond to claims made during the policy period ( subject to any “prior acts” coverage that may be included).
Most professional liability umbrella policies have relatively broad definitions of “professional services,” which are generally defined to include any service that the insured provides for a fee. Thus, the coverage can extend to a wide range of professionals, including lawyers, accountants, architects, engineers, and real estate agents, as well as many others.
One of the most important features of a professional liability umbrella policy is the definition of “bodily injury.”
Unlike a personal umbrella policy, which generally requires an “accident” to trigger coverage, a professional liability policy will often provide coverage for “bodily injury” that is sustained as a result of the professional services that are rendered, even if there is no accident. For example, if an architect designs a building that collapses, the policy would likely respond to any bodily injury claims that result, even though there was no accident.
Another important feature of professional liability umbrella policies is the exclusion for “professional services.”
This exclusion generally bars coverage for claims arising out of the insured’s rendering of, or failure to render, professional services. However, the exclusion is usually much narrower in a professional liability policy than in a personal umbrella policy. For example, the typical personal umbrella policy would exclude coverage for any claim arising out of the insured’s business activities. However, the professional liability policy would likely provide coverage for claims arising out of the insured’s business activities, as long as the claim is not based on the professional services that were rendered.
As with any insurance policy, it is important to read the policy carefully to understand the coverage that is provided. If you have any questions about your policy, you should contact your insurance agent or broker.
