Umbrella Insurance

“Umbrella Insurance” is a form of liability insurance. It is additional coverage beyond a typical liability policy limit. This type of coverage kicks in when other insurance is not sufficient to cover your costs. You would use this policy for a situation such as you have $200,000 in bodily injury coverage through your car insurance policy, but you are responsible for $300,000 of personal injury damages to another individual.

Your car insurance covers the first $200,000. Without umbrella coverage, you are stuck with the additional $100,000 out-of-pocket. This type of incident is the reason why supplemental insurance is available. The umbrella coverage would pay that extra $100,000 that is beyond your auto insurance limits.

Umbrella coverage can also work with your homeowners’ liability coverage. If someone is injured on your property, and sues for more than your insurance covers, then umbrella insurance is triggered.

Depending upon the policy, umbrella insurance might also include property damage, liability on your owned rental units, a defamation lawsuit, and false arrest. You need defined threshold coverage from the same insurer to qualify for umbrella coverage. Most insurers will not offer umbrella coverage if they decide you have enough liability coverage already in place.

Umbrella coverage covers a lot, but it doesn’t insure everything. It does not cover intentional acts or pay out for punitive damages. It is specifically for usual negligence-based liability coverage. Umbrella insurance is basically additional liability insurance.