An umbrella insurance policy is extra liability insurance coverage that goes beyond the limits of the insured’s homeowners, auto, or watercraft insurance. It provides an additional layer of security to those who are at risk of being sued for damages to other people’s property or injuries caused to others in an accident. It also protects against libel, vandalism, slander, and invasion of privacy.
KEY TAKEAWAYS
- An umbrella insurance policy is a type of personal liability coverage that goes beyond the amount that regular homeowners or vehicle insurance offers.
- To own umbrella insurance, you must own a standard homeowners, auto, or watercraft policy; the umbrella policy kicks in after the regular coverage has been exhausted.
- Candidates for umbrella insurance include people who possess considerable assets or potentially hazardous items or engage in activities that could increase their risk of being sued.
What will a personal umbrella policy cover?
- An umbrella policy may cover liability claims your primary policy does not cover. It can also pay for liability and legal defense costs that exceed the amount your primary insurance policy will pay.
- Umbrella policies cover situations you are held responsible for, including bodily injury, property damage, or personal injury.
What is not covered under umbrella policies?
- Umbrella policies will not pay for damage to your home or vehicle. For example, your umbrella policy would not cover hail damage to your car if your auto policy does not cover it.
- Punitive damages (e.g., drunk driving because a person consciously chooses to drink, knowing this could injure someone).