A personal lines umbrella policy creates an extra layer of protection for you against very large claims when you may be financially liable for a loss or injury to someone else. A personal umbrella policy doesn’t cover everything, so it’s important to clarify with your agent what triggers your insurance.
An umbrella is designed to complement a homeowners, auto and other personal lines insurance program by extending additional coverage over and beyond the limits purchased. Umbrellas aren’t meant to be a catch-all for anything that could possibly happen and often provide more money only for losses that are covered by another policy (often called the “underlying” policy). Thus, if a loss isn’t covered by the underlying policy, it might not have additional coverage under the umbrella either.
Umbrella policies can protect against running out of coverage under another policy. These claims typically arise from bodily injury or property damage to another party for which you are found legally liable. Defense costs associated with a lawsuit brought against you may also be covered.
Protection of assets is the most important benefit of adding an umbrella policy to your existing personal insurance program. Factors like the rising cost of medical expenses and lost wages of an injured party can add up very quickly. When the limits under the home or auto policy are exhausted, defense coverage may cease, and personal assets would have to be used to pay these uncovered costs. An umbrella policy is an important element in an overall asset-protection program.
