What is umbrella liability insurance?

What is umbrella liability insurance?

July 09, 2023

Umbrella liability insurance is a type of personal liability insurance that provides extra coverage beyond the limits of your homeowners, auto, or other basic liability policies.

Here's how it works: If you're held responsible for a significant claim or lawsuit, your standard policy will pay up to its limits. But if the claim exceeds these limits, your umbrella policy can cover the excess amount — up to the limit of the umbrella policy.

This type of insurance is called an "umbrella" policy because it provides a broad range of coverage and can extend over multiple types of policies. It's designed to help protect you from major claims and lawsuits, and as a result, it helps protect your assets and your future.

For example, if you're at fault in a car accident that causes serious injuries to another person, and their medical costs exceed the limit of your auto insurance liability coverage, your umbrella policy can help cover the remaining cost.

Umbrella insurance typically provides a high level of coverage, often starting at $1 million, and it's usually relatively inexpensive given the amount of coverage it provides.