Why is the Excess Liability Insurance also called the Umbrella policy?

alistair · Apprentice Joined: 30 Oct 2005 Posts: 5

There are a lot of situations where, along side some extra and unforeseen risks, there are liabilities in standard cases that make you pretty much susceptible to large financial losses. Now, such policies are actually called excess liability insurances, and cases they involve are, say, if you own a business, and someone gets hurt under your authority, sues you and win a large amount of money. Needless to say, you could be ruined, and such policies protect you precisely from that. These are often called umbrella policies, as they are an additional protection level, aside from the standard one.

mitchel189 · Apprentice Joined: 31 Jul 2005 Posts: 6

When it comes to insurance policies, what is really an important thing to focus on is the risk, and how big it is. The bigger the present risk, the more difficult it will be to get a good deal, and vice versa if the risk is low. Now, the standard risks are determined by the insurance company, and be it a life insurance, health, or some other, there will be some basic factors accounted for. However, extra risk does not fall within that category, and that means that in order to get covered, you will have to pay (much) higher price and premiums.

niles641 · Apprentice Joined: 13 Jan 2008 Posts: 3

The one thing insurance policies really revolve around is the premium/risk ratio. Indeed the set of risks that are present in a particular case determine the possible range of covers and the price of each deal, as well as your payments. Standard risks are those that are easily foreseeable, so that, say, with a car insurance, a standard risk could be a traffic accident, but not a garage roof falling down, thus destroying a car. Indeed, the settling all the details is very complicated, and you have to be very careful doing that.