Umbrella policies are valuable for providing additional liability coverage, especially when facing a lawsuit. However, it’s important to understand how defamation suits work, what your policy covers, and any special exclusions that may apply.
Defamation Lawsuits
Umbrella policies can help cover the costs associated with defamation lawsuits, including paying judgments against you. These policies often include coverage for legal defense, which may involve hiring a lawyer or legal team. However, you may be required to choose from a list of lawyers approved by the insurance company. An agent at Capital Insurance can provide more details about this process.
Policy Limits
Every umbrella policy has a coverage limit, which is the maximum amount the insurance company will pay. When purchasing a policy, you select this limit, and the insurer will only pay up to that amount, even if the judgment against you exceeds it.
For example, if a judgment against you is $2 million but your policy limit is $1 million, you’ll be responsible for the remaining $1 million. This is why legal experts often recommend settling lawsuits for amounts within your coverage limits.
Special Exclusion
Defamation lawsuits typically have one major exclusion: they do not cover actions taken with malicious intent. For instance, if you share your side of a story to clarify the facts, this may or may not be considered malicious intent depending on the circumstances, such as who you were speaking to or whether it involved a reporter.
However, if you intentionally slander someone to damage their reputation or cause financial harm, this is considered malicious intent, and your insurance policy will not provide coverage.
An experienced agent at Capital Insurance can help you better understand your umbrella policy and its exclusions. Contact us today to learn more. We proudly serve the Spokane, WA area.
