What Does an Umbrella Insurance Policy Cover?

An umbrella policy provides additional liability coverage.

If you're sued because of a negligent act, such as causing an auto accident or creating a hazard on your property that results in injury, you will need liability insurance to protect your assets. An umbrella policy provides you with additional liability coverage.

Function

In the event of a lawsuit, it is possible that your existing liability coverage may not be enough to cover a judgment. An umbrella policy provides additional liability coverage over and above what your base policy provides.

Types

A personal umbrella policy will provide additional liability for a homeowner and auto insurance policy. Business owners may elect to purchase a commercial umbrella policy to supplement their general liability policy.

Considerations

The more assets you own, the more you stand to lose if you are sued and the greater your need for an umbrella policy. Also, keep in mind that to obtain an umbrella policy, an insurer will often require that your underlying liability policies also be issued by the same company.

References

• MSN Money: Umbrella Policies Plug Holes in Your Coverage
• Business Insurance Now: What Is Umbrella Liability Insurance