Understanding Umbrella Insurance – Part One: What is Umbrella Insurance

Umbrella insurance provides additional liability coverage when standard home and auto liability limits are not enough to cover costs. In this post, we discuss some basics about what umbrella insurance is and what it covers. This is part 1 of 6, so stay tuned for more info!

What is umbrella insurance?

Umbrella insurance is extra liability insurance intended to protect you from losses that are not covered by your standard liability insurance.

Umbrella insurance is common for individuals that are concerned a lawsuit settlement could jeopardize their net worth and are interested in additional liability coverage to protect their financial assets.

How does umbrella insurance work?

Umbrella insurance is a supplemental policy meant to provide protection above and beyond your homeowners and auto insurance policy. It is intended to protect you from financial losses if you are served with a lawsuit from another party.

If your assets exceed the liability coverage amount provided by your home or auto insurance, then umbrella insurance is likely a good idea.

What does an Umbrella Insurance Policy Cover?

Unlike standard liability policies (which only cover injuries and damages), an umbrella policy also covers legal cases and damages related to libel, vandalism, slander, invasion of privacy, and other more. Here are some examples:

Bodily Injury: Will help pay for someone else’s medical bills if you’re at fault
Personal Injury: Will protect you from lawsuits related to libel and slander
Property Damage: Will protect you if you’re at fault for a car accident
Landlord Liability: If you’re a landlord it will protect you if someone is injured on your property

what is not covered by umbrella insurance?

Your Property: If your property is damaged by someone else
Your Medical Expenses: If you are hurt or injured on your property
Business Losses: Liability losses will not be covered if you operate from home
Intentional Crime or Actions: This policy won’t financially protect you from illicit behavior
Lawsuits From Breach of Contract: You will not be covered if you’re facing a lawsuit for a contract breach