What is an umbrella policy?
A policy that provides additional liability coverage that kicks in after your other insurance policies have reached their coverage limits. Personal Umbrella policies typically offer between one and five million dollars of liability coverage.
What does it cover?
An umbrella policy covers extra liability in the event of an accident after you initial liability has been exhausted. For instance, if you are liable for $1 million in a car accident and your auto policy covers $500,000 of liability, your auto policy covers the first $500,000. Your umbrella covers the remaining $500,000, assuming your policy covers the incident and you purchased that much coverage. If you are liable for $250,000 in an accident on your property and your homeowner’s insurance covers $300,000, your umbrella policy wouldn’t be needed.
Why is it important?
Umbrella coverage is there for you when the unexpected happens. Your dog could bite the neighbor’s child, your teen driver could hit a cyclist, a guest could fall down your stairs. You could be held liable to others for the cost of damages – injuries, property destruction, emotional distress, lost wages, and more. It only takes one serious accident and a resulting lawsuit to put everything you own (and will own) at risk.
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Actual coverage is subject to the policy as written.