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.
Broader Coverage. 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 coverage.
Inexpensive. Umbrella policies are not very expensive. Accordingly, associations should seriously consider purchasing umbrella policies.
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