Personal Umbrella Insurance is the type of insurance that provides coverage above the limits of your existing liability policy, such as Auto Insurance or Homeowner’s Insurance. Umbrella Insurance coverage begins to work when your existing policy has reached its liability limits. Umbrella Insurance policy typically extends coverage for such liability limits: Bodily Injury, Personal Injury, Property Damage, and Landlord Liability. It does not include coverage for personal belongings, existing coverages, business losses, intentional errors, and oral or written contracts.
Liability issues are very common, and somebody can present you with a lawsuit you did not expect. Umbrella policy protects you in the event you exceed liability coverage in an accident. For better understanding of how Umbrella Insurance works, consider this: if you are at fault in an accident and the other party sues you for $1 million, while your primary liability policy covers only $500,000, you will be responsible for the rest out of pocket. If you have an Umbrella Insurance in place, it will pay for the remaining $500,000 or less, depending on the limit of your umbrella policy.
Accidents like this are very rare, but you can never be too careful. Umbrella Insurance policies are available at low cost, but they provide enough coverage for you to never worry about liability issues. In fact, you can choose coverage with the limits of up to $5 million. Keep in mind that you can purchase Umbrella Insurance only if you already have an underlying home or auto insurance policy.