Insurance for Dummies, 2nd Edition
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You purchase umbrella insurance so that you’re covered under every contingency. An umbrella policy should also provide coverage for the gap between the value of the insured item and the amount you owe on it. The following table lists basic umbrella coverage every umbrella policy should include:

Gap Description What Coverage You Need Comments
Territory of coverage Worldwide Make sure lawsuits outside the U.S. and Canada are covered.
Personal injury liability Libel, slander, false arrest, and so on Underlying insurance may be required. Be careful.
Coverage of newly acquired vehicles, boats, and so on Automatic, no notice required Poor policies require notification in 30 days or no coverage. Dangerous!
Liability assumed in contracts Weddings, parties, rentals of all kinds Poor policies limit coverage to residential contracts only.
Punitive damages Allowed in some states You could travel in a state that allows them.

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Jack Hungelmann has more than 2,000 hours of insurance education and has been in private practice for more than 30 years. He is the proprietor of an independent insurance agency, and he teaches risk management and insurance courses through continuing education programs in Ohio and Minnesota.

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