IN PLAIN ENGLISH

Umbrella insurance protects your assets if you happen to find yourself underinsured.

Need insurance? Click to find the cheapest car insurance rates instantly

The purpose of being insured is to protect you and your assets against as many potential risks as possible. While most P&C policies include liability coverage, you may find that your policy limits are insufficient to protect all of your assets. Unfortunately, accidents happen when you least expect them, but an umbrella insurance policy can keep you from being underinsured when you can least afford it.

 

What is umbrella insurance?

Umbrella insurance works in conjunction with your auto and/or homeowners insurance policy to provide additional liability coverage if you happen to exceed the limit of the underlying policy. Say that you have an auto policy with liability limits of $250,000, you injure someone in an accident where you are considered at fault, and the other person’s injuries total $400,000. If your coverage maxed out at $250,000, you would be on the hook for an additional $150,000 worth of injuries; which could be disastrous.

Since umbrella insurance policies provide coverage incrementally from $1M to $5M in the above example, you would not have to pay the extra $150,000 out of pocket. Considering umbrella policies are fairly inexpensive, it’s easy to see the value of adding this coverage to protect your assets from a lawsuit resulting from being underinsured after an accident.

While it would be impossible to fully protect yourself from all possible risks, an umbrella insurance policy helps to mitigate some of those risks and makes it less likely that you could lose your home, or other high dollar assets, because of a lawsuit.

 


 

This article was written by one of The Zebra’s resident insurance experts. Each article is thoroughly researched to ensure we provide readers the most accurate — and helpful! — information possible. That’s insurance in black and white.®

Share on:

Recent Questions:

Should I claim repairs to my vehicle under my own auto insurance or under the property owners umbrella insurance?

May 28, 2019
Location pin iconMissouri City, TX

My SUV was damaged while leaving a baseball field owned by the local Levee Improvement District (LID). While leaving the ...

Will my homeowners cover liability for small businesses?

Feb 16, 2019
Location pin iconUrbana, OH

Will my homeowner, auto, & umbrella policies cover liability for a small business in my home that sells through internet ...

Why are my limits of liability increased when I buy an umbrella policy?

May 11, 2018
Location pin iconDecatur, GA

When umbrella coverage was added to policy, company raised Limits of liability from 100/300/100 to 250/500/100 and costs more. Why? ...

Is it necessary to get umbrella insurance with uninsured / uninsured coverage?

Aug 03, 2017
Location pin iconColumbus, OH

My wife and I are both retired and are on medicare. When we were talking to our agent about an ...