What is an "umbrella policy"?

An umbrella policy is designed to provide an additional layer of liability coverage beyond the limits of standard homeowners and auto insurance policies. This means that if a claim exceeds the coverage amounts of your underlying policies, the umbrella policy can kick in to cover the additional costs. This type of policy is particularly beneficial in protecting assets against lawsuits or significant claims, as it generally offers broader coverage for various risks that may not be fully addressed in standard policies.

For instance, if you were involved in an accident that resulted in severe damages or injuries exceeding your auto insurance limits, an umbrella policy could help cover those extra costs. Additionally, it may provide coverage for certain risks that aren't typically included in standard homeowners or auto policies, offering a safeguard for your financial security.

Understanding the specific function of an umbrella policy is crucial for homeowners who want to ensure comprehensive protection against potential liabilities.