An umbrella policy is an additional layer of insurance above the primary policy. It provides excess coverage once the underlying policy has been exhausted. For example, if an association has a $2 million general liability policy and settles a claim for $3 million, the primary policy pays $2 million and the umbrella pays the remaining $1 million.
In addition to providing excess coverage, umbrellas often fill gaps that may exist in the primary general liability policy
. They are usually broader in their coverage and in most cases, but not all, extend to the D&O issues
as well as the employer's liability portion of the association's workers' compensation
. Umbrella policies are not very expensive. Accordingly, associations should seriously consider purchasing umbrella policies.
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