Umbrella insurance is essentially extra liability insurance. As with auto, life, or homeowner’s insurance policies, liability coverage is structured to protect you and your assets in the event of an accident, and further protects you from lawsuits or other major claims against your insurance or financial assets.

Umbrella coverage provides additional coverage in two primary ways:

  1. It goes above the limits of your auto, home, and boat insurance policies. It’s structured to take effect when the resources for the other liability coverage policies have been depleted.
  2. It also provides coverage for claims that other liability policies may exclude for situations such as false arrest, libel, slander, as well as liability coverage on rental units you own if you are a landlord.

What Types of Situations Does It Cover?

  • Injuries
  • Damage to Property
  • Lawsuits
  • Personal Liability Situations

While your existing auto, home and boat insurance policies may cover these situations as well, this type of umbrella coverage goes above and beyond the limits of your existing policies and may cover some situations that aren’t covered in these other types of insurances.

For example, say you are found at fault for a car accident, and the medical bills and bodily injury your insurance is responsible for covering only goes to a limit of $250,000. What happens when the other person’s medical expenses exceed that amount? This is when umbrella coverage kicks in, to provide extra liability insurance. In addition, if the driver’s injuries are so severe that he can’t work for six months, suddenly he’s suing you for damages to cover the months he’ll be out of work. It provides the additional coverage you need when your existing insurance policies aren’t enough. They’re typically available in million-dollar increments, but they don’t always have to be. Your local insurance agent can help you decide if an umbrella insurance policy makes sense for you.