Umbrella insurance provides an extra layer of liability protection above and beyond your existing insurance policies, kicking in when those other policies reach their limits. Here’s what you need to know:

How Umbrella Insurance Works

• Extra Liability Coverage: An umbrella policy adds a significant extra amount of coverage for liability claims. For example, a $1 million umbrella policy provides an additional $1 million of coverage over your home and auto liability limits.
• When it Kicks In: Let’s say your auto insurance has a liability limit of $300,000, but you’re sued for $1 million after an accident. Your auto insurance covers the first $300,000, and your umbrella policy would cover the remaining $700,000.
• Broader Coverage: Umbrella policies sometimes cover situations your other policies might not, such as:
  • Libel and slander
  • False arrest
  • Invasion of privacy
  • Certain lawsuits while traveling abroad

Who Needs Umbrella Insurance?

Umbrella insurance is a smart idea if you:

• Have significant assets: Homes, vehicles, savings, investments – if you have substantial assets, you have more to lose in a lawsuit.
• Own high-risk property: Things like pools, trampolines, or certain dog breeds can increase your liability risk.
• Engage in high-risk activities: If you coach sports, host frequent parties, or volunteer serving on a board, an umbrella policy adds protection.
• Want maximum peace of mind: Umbrella policies are relatively affordable for the substantial protection they offer.

Key Points

• Underlying Policies Required: You must have home, auto, or other liability insurance in place to qualify for an umbrella policy.
• Exclusions Exist: Umbrella policies typically don’t cover intentional harm, business liabilities (you’d need commercial insurance for that), or contractual disputes.