Can Umbrella Insurance Coverage Pay for a Car Accident? 

  • Umbrella insurance, also known as excess insurance, is designed to provide extra protection beyond the existing limits and coverage of other policies, such as home or auto insurance, or for claims that may not be covered by liability policies. 
  • If you were injured in a car accident and your costs exceed the at-fault driver’s auto policy limit, you may need to explore whether the at-fault party has excess coverage under an umbrella policy.
  • If your settlement exceeds the primary insurance limit, then umbrella coverage can be used to cover the remaining balance. 
  • Georgia law allows your lawyer to discover all available insurance policies—including umbrella insurance— as well as how much coverage is available under each policy. 

If you are involved in a serious car accident, you may suffer injuries that require a long hospital stay, surgeries, physical therapy, and more. The cost of medical care has been steadily increasing for decades, with certain healthcare costs, such as prescription drugs and hospital visits, even outpacing general inflation in the United States. As these costs rise, seeking medical care after a car accident can mean a significant financial burden for victims and their families. 

Ideally, these costs would be fully covered by the auto insurance policy of the driver who caused the accident (or your own policy, if you were at fault). However, many car accident victims find that the cost of their injuries is far greater than the amount of auto insurance coverage available.  

In Georgia, drivers are only required to carry $25,000 per person and $50,000 per accident in liability coverage for bodily injuries and $25,000 for property damage, though many people opt for higher limits. O.C.G.A. § 33-7-11. If the at-fault driver only carries the minimum amount of coverage, it is likely that you will not receive full compensation for a serious or catastrophic injury from the policy. In an even worse scenario, the person who caused the accident was driving with no insurance, which means they have no policy to cover your costs. 

To receive full compensation, you may need to find additional coverage provided by an umbrella policy. Sometimes, the at-fault party carries an umbrella policy in addition to their auto insurance policy, and this extra coverage can ensure that you receive maximum compensation for your claim. If the at-fault driver has no umbrella policy, you may be able to make a claim against your own under-insured or un-insured (UIM) policy. 

When the at-fault driver is uninsured or underinsured, you can file a claim against your own uninsured/underinsured motorist (UIM) policy to cover your remaining costs. Georgia law requires insurers to offer UIM coverage in at least the same amount as their liability coverage. O.C.G.A. § 33-7-11(a)(1)(A). UIM insurance is not mandatory in Georgia, however, we strongly recommend that you add this coverage to your policy, due to the number of drivers on the roads and highways of Georgia who are uninsured or seriously underinsured.

What is Umbrella Insurance? 

Umbrella insurance is an extra, or supplemental, insurance policy that you purchase on top of your regular liability coverage. This type of insurance is designed to provide extra protection beyond the existing limits and coverage of other policies, such as home or auto insurance, or for claims that may not be covered by liability policies (e.g., libel, slander, false arrest, or liability coverage on rental units you own).  

Umbrella insurance provides coverage to broadly protect you against claims for injuries, property damage, certain lawsuits, and other personal liability situations. Typically, it covers expenses such as medical bills, vehicle repairs, lost wages, and legal fees/defense costs.  

Though it costs more money to carry umbrella coverage, having an umbrella policy gives you an important layer of security if you are sued personally for significant property damage and/or serious bodily injury when your regular insurance is not enough to cover the damages. 

Umbrella policies are especially recommended for people who own property, have significant assets, or have a family. The reason is simple: if you are found liable for someone’s injuries and the damages exceed the limit of your regular insurance policy, the victim can sue you personally to collect the amount that insurance did not cover. If successful, the victim can attach a lien to your house, land, car, or other valuables to pay the verdict. 

The cost of umbrella insurance depends on several factors, including the amount of coverage you choose, your driving record, and your claims history. However, the cost is generally affordable, especially when you consider the potentially enormous costs it can help you avoid. For example, a $1 million umbrella policy typically costs around $200-$300 per year. 

How Does Umbrella Insurance Coverage Work After a Car Accident? 

After a car accident, the person who caused the wreck is responsible for paying the damages. If the at-fault driver has auto insurance, the insurance company is required to pay costs up to the policy limit for bodily injuries and property damage in a valid claim. If the total cost of the claim exceeds the policy limit, the driver’s umbrella policy can be used to cover the remaining expenses. 

For example, assume a driver is at fault for a car accident, and the cost of the victim’s injuries is $500,000. The driver carries an auto insurance policy with a bodily injury limit of $300,000. After the $300,000 policy is exhausted, the driver’s umbrella policy can be used to cover the remaining $200,000 (up to the umbrella policy limit). 

In a different scenario, assume that the at-fault driver only carries the Georgia minimum of $25,000 in bodily injury coverage and has no umbrella policy. The victim, however, had purchased a UIM clause under their liability umbrella policy that matches their total amount of umbrella coverage, which is $1 million. That means they can file a claim under their own umbrella policy to cover the remaining $475,000 in costs.  

Do You Need to File a Legal Claim to Get Compensation from Umbrella Coverage? 

Depending on the circumstances, you may need to file a legal claim to get compensation from an umbrella insurance policy. If an at-fault driver is held liable for causing someone to be injured in a car accident and the value of the claim exceeds the liability insurance policy limits, umbrella insurance may kick in.  

If the driver purchased the auto policy and umbrella policy from the same insurance company, the carrier may handle the entire claims process at once, even if it involves tapping into the umbrella coverage to ensure that all covered expenses are paid out. When the driver purchased the umbrella policy through a different insurance company, you may need to file a separate or additional claim for the remaining amount with the umbrella insurer after the auto insurer has exhausted its policy limit. 

Most umbrella insurance carriers require you to have an existing policy with them, which makes it more likely that it also issued the driver’s auto policy. However, if your umbrella carrier requires you to have personal liability coverage through either a homeowners policy or an auto policy, the driver may use different companies for their insurance. 

Must a Settlement Exceed Regular Insurance Limits for Umbrella Coverage to Apply? 

If the settlement exceeds the primary insurance limit, then umbrella coverage can be used to cover the remaining balance. But umbrella policies can also cover certain types of liability not covered by primary auto insurance, such as legal defense costs, punitive damages, and personal injury protection beyond primary policy limits.  

Identifying Whether the At-Fault Driver Has Umbrella Insurance Coverage 

Often, the at-fault driver may not volunteer that they have umbrella coverage when they exchange auto insurance information after the accident. And many injured car accident victims do not realize that there may be additional coverage beyond the primary auto policy.

An experienced car accident attorney can help you find all available insurance policies to ensure that you receive maximum compensation for your claim. Under O.C.G.A. § 33-3-28(a)(1), both insureds and carriers are required to disclose insurance policy information within 60 days after receiving a written request. This statute allows your lawyer to discover whether any additional policies are available and how much coverage is available under each policy. 

What Are Some Challenges That Come with Recovering Compensation under an Umbrella Policy? 

Though it is designed to provide an extra layer of protection for insureds, recovering compensation under an umbrella policy can be a challenging and complex process. Like any insurance policy, umbrella policies come with a laundry list of exclusions for situations that are not covered. Navigating these exclusions and the terms of your policy can be tricky. 

Even if your claim falls within the scope of coverage, proving liability can also be difficult. The insurance company will look for any reason to deny coverage, including arguing that its insured was either not responsible or only partially responsible (which can reduce its payout because Georgia is a comparative negligence state).  

Other challenges include policy limits that do not fully cover your losses, and meeting the strict time deadlines for filing claims. By hiring an attorney who understands the potential hurdles and navigates the process for you, you can increase your chances of receiving full compensation. 

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