Umbrella insurance, or “personal umbrella insurance,” is a type of liability insurance whose coverage is broader than normal homeowner’s or automobile insurance. It covers a wide range of unexpected injuries, accidents, and occurrences that are not normally covered by standard insurance policies.
Umbrella insurance might cover an incident where a guest is injured in a swimming pool accident while visiting the policyholder’s home. In the unlikely event that the homeowner’s normal insurance does not cover the guest’s injuries, an umbrella policy might cover this incident.
What Does Umbrella Insurance Cover?
Every umbrella insurance policy will differ from person to person and from company to company. It is generally the case, however, that they provide broad coverage for a wide range of injuries, accidents, and legal liability issues. Generally, they provide coverage for situations and events that fall outside of the scope of more basic insurance policies.
Umbrella insurance, for instance, may cover:
- Injuries to guests at your home
- Dog bite cases or other instances where your pet has injured another person
- Property damage where you were at fault or where your pet or child was at fault
- Trip and fall incidents on your property
Some umbrella policies also cover legal liability and lawsuit costs. In addition to slander/libel, false arrest, and malicious prosecution, these lawsuits may include other causes of action against the policyholder.
What Are Some Common Types of Umbrella Insurance Conflicts?
There are several types of legal conflicts associated with umbrella insurance policies. These can involve:
- Insurance fraud (for instance, where an agent or company uses misrepresentation or deceit to get a client to sign an insurance contract)
- Breach of contract
- Continuing to pay excess amounts when no longer necessary
- Ambiguous words or definitions in the umbrella insurance contract
- Confusing terms, exceptions, or exclusions
- Unauthorized cancellation of a policy
Regarding umbrella insurance, other family members or household members are often excluded from coverage. Umbrella insurance plans cover only the policyholder, so confusion can arise if the policyholder believes that others in their household are covered. If they are not properly understood, household exclusions can create unexpected issues.
What If I Have a Legal Dispute Involving Umbrella Insurance?
An umbrella policy can protect a person from various liabilities and costs associated with unexpected or unplanned events. Legal disputes or issues can also arise from them.
For instance, umbrella insurance policies can lead to claims such as breach of contract, insurance fraud, or default on insurance terms. A lawsuit or a claim of action may result from such disputes.
In some cases, it may be necessary to file a lawsuit to resolve the dispute. Damages can be awarded to the non-breaching party to compensate them for losses caused by the violation. A court might order a different remedy, such as rewriting an ambiguous insurance contract term.
What Are the Legal Remedies for an Umbrella Insurance Dispute?
The remedies for umbrella insurance disputes are similar to those for contract disputes. A non-breaching party may receive damages for monetary losses caused by a policy violation. As a result, they will be compensated for losses directly caused by the breach.
It is also possible for the court to issue other remedies, such as instructions to rewrite a portion of the contract. The standard used by the court in many cases is “whether a reasonable person would attempt to read or understand the policy terms.” This can be difficult to interpret depending on the facts. An insurance dispute is generally best handled by a legal professional.
What Should I Do if My Insurance Company Denies My Claim or Acts in Bad Faith?
An insurance company may deny a claim for several reasons, including, but not limited to:
- Incorrect patient or claimant identification information;
- Coverage is terminated;
- Services are not covered;
- Member failing to update insurance with other insurance information;
- Timely filing or statute of limitations;
- Coverage or policy exclusions;
- Pre-existing conditions; and
- Fraud or misrepresentation.
An insurance company must deny or approve a claim in good faith by law. Insurance companies often deny claims in bad faith, however.
It is possible to sue an insurance company for bad faith under the law. Insurers have been held liable for bad faith for the following reasons:
- Delaying handling claims;
- Lack of investigation;
- Refusal to defend a lawsuit;
- Refusal to make a reasonable settlement offer; and
- The irrational interpretation of the insurance policy.
Can I Sue My Insurance Company?
An individual may have to sue their own insurance company for a variety of reasons. It is helpful to understand the legal relationship between the individual who purchases insurance or the insured and their insurer to understand the process.
One party agrees to pay a premium in exchange for the other party providing coverage under an insurance policy. The policyholder is referred to as the insured, while the insurer is referred to as the insurer.
In the event of a loss caused by an insured event, an insurance company will protect the insured party from:
- Losses;
- Damages; or
- Liability.
Often, legal claims arise when insurance companies fail to indemnify or protect their insureds when the policy covers an event or when they fail to meet their end of the contract in another way, such as by wrongful denial of an insurance claim.
How Do I File a Lawsuit Regarding Insurance?
A homeowner’s insurance claim may give rise to several disagreements. Any losses caused may not be covered, according to the insurance provider. It may also assert that the specific kind of damage is not protected. Or, there may be a difference of opinion between the insurance company and the homeowner on the claim size; often, the insurance company wants to pay less than the homeowner feels they should.
The denial of a claim that should be paid per the policy’s provisions by an insurance company occasionally gives rise to a claim for insurance bad faith on the homeowner’s part.
A person has the right to bring a civil action in a court of law if their administrative appeal with the insurance company is turned down. Of course, before bringing a lawsuit, a person should be represented by an insurance attorney. A person must submit a complaint with the court and notify the insurance company of the lawsuit’s start through their attorney. A default judgment could result from the insurance company’s failure to respond to the complaint.
The next step is a discovery procedure, during which the insured homeowner and the insurance provider exchange information and participate in depositions.
A trial is held if a party cannot agree and concludes when the judge or jury renders a verdict. A trial may be difficult, and the result is never guaranteed. States have different rules governing contracts and insurance. Rules may vary depending on where a person resides. In any case, a judge or jury renders a verdict if the case proceeds to trial.
What Are Some Remedies Available in an Insurance Claim Lawsuit?
If an individual decides to file a civil claim against their insurance company and that claim is successful, they may be awarded damages. Breach of contract is the most common legal theory under which insurance companies are sued.
Upon winning their breach of contract claim, an individual is entitled to actual damages or the coverage they were supposed to receive under the contract. Depending on the jurisdiction, they may also be able to recover out-of-pocket expenses, such as attorney’s fees.
Punitive damages may also be awarded in serious cases.
A party may be entitled to compensation if an insurance company wrongfully denied a claim and delayed payment:
- The value of the property claim;
- The attorney’s fees associated with pursuing the claim; and
- Possible punitive damages.
Do I Need a Lawyer for Help with Umbrella Insurance Issues?
Often, umbrella insurance policies are quite technical and complex. You may need to hire a personal injury lawyer in your area if you need help understanding an umbrella insurance contract.
You should find detailed information about the attorney’s experience when looking for a prospective personal injury attorney.
Consider these factors when hiring a personal injury lawyer:
- The lawyer’s position in the firm
- The lawyer’s experience in personal injury
- The lawyer’s experience in handling cases similar to yours
- The lawyer’s success in related cases
- The lawyer’s fees for related cases
- The lawyer’s view on the projected outcome of your case
- How many other cases the lawyer is currently working on
- The average amount of compensation the lawyer wins in related cases
- Any conflict of interest issues
Make sure you conduct a thorough interview with the attorney. For your personal injury claim to succeed, you must establish a dependable attorney-client relationship before any litigation begins.
Your attorney can explain your rights and options under the contract and assist with contract negotiations. Your lawyer can also represent you in court if you encounter legal issues or disputes related to the contract.
