What is it?
Umbrella insurance is meant to help protect you from large liability claims. It acts as an "umbrella" above your auto and homeowners policies. This protection kicks in when your underlying policy liability coverage has been exhausted.
What does it cover?
Umbrella insurance can extend protection for personal liability losses, including:
Lawsuits arising from property damage or injury
Legal defense costs once your underlying policy limits have been exhausted
Do I need an umbrella insurance policy?
It's suggested to be purchased if you:
Have high savings or other assets
Own a vehicle or multiple vehicles
Own rental property
Serve on the board of a nonprofit
Write and post reviews or products and businesses
Purchasing and umbrella insurance policy brings peace of mind.
Consider this scenario: a car accident occurred where you missed a stop sign, and you are found to be at fault. The other party is a dentist and requires hand surgery after the accident. The dentist is unable to perform his work duties and sues for his medical bills and loss of income. Sometimes it isn't about the severity of the crash, but about who you are involved in an accident with. Your underlying auto policy only pays up to $500,000 per accident. Who will cover the remaining bills? Your umbrella policy will.
Things to note
You may need to meet certain eligibility requirements to purchase an umbrella policy.
A homeowners insurance policy must have a minimum of $300,000 for personal liability.
An auto insurance policy must have a minimum of 250/500/100 (some companies require higher coverages of 500/500/100)
Claim history and driving history must also meet company requirements