Considerations when taking out an umbrella policy

If you are looking to take out an umbrella policy to insure for a higher level of liability than you presently enjoy, you will need to satisfy the company about various matters. You have a duty to reveal these things completely truthfully as failure to do so will invalidate the policy.

You will need to disclose any previous accidents and violations which have happened.

All your assets will have to be listed.

The extent of your existing cover has to be disclosed obviously since the umbrella cover is supplementary and so the company cannot assess their exposure to risk without information about the main policies.

Clearly, you will need to specify the extent of the financial cover you require. Since you are topping up the present insurance you will need to think carefully about how far you are already protected and the extent of extra protection you need. It is relatively cheap to purchase this kind of policy but there is no point in buying insurance up to a point where it is never realistically going to be needed.

The reason that this form of insurance is relatively inexpensive is that it is less likely that a claim will be made than is the case for a regular policy, since the insured person will initially look to that policy. But as claims will be less frequent, it is likely that they will be scrutinized particularly carefully. So it is an absolute must to review the answers you have given and to be certain that you have been open and clear about everything relevant to the policy application.

Your duty to the insurance company is known legally as a relationship of ‘utmost good faith’ meaning that there is a very high standard of honesty implied into the relationship, extending to actively drawing attention to anything that you ought to realise is relevant. In theory this applies to all the dealings between you and the insurer, and also imposes a duty on the insurer to act in the same scrupulously honest way.

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Tags: umbrella policy   Posted in Insurance Advice