What Does an Umbrella Policy Cover?

Both home and auto insurance policies come with liability coverage, but many insurers set the maximum amount of coverage at limits that may be lower than you need. Fortunately, an umbrella policy offers an effective way to increase your liability insurance coverage and may as well bring coverage for some additional risks.

You will sometimes see umbrella insurance referred to as excess liability insurance. However, while similar, these 2 policy types have some differences. An excess liability insurance policy does not add any new coverage. Instead, it simply stacks its liability limits on top of your existing liability coverage, making no changes to how your coverage applies. By comparison, an umbrella policy stacks coverage on top of your existing coverage limits, but also often adds coverage for libel and slander. Slander refers to spoken defamation that causes harm, whereas libel refers to written defamation that causes harm. In today’s online world, where a few hastily typed words can be easily misunderstood, these additional coverages can make an umbrella policy worth its weight in gold.

An umbrella policy does not protect just you, but also the other members of your household. This means that your spouse and children are also protected by your policy. But there are some limits to how coverage is applied , and you will usually need a qualifying amount of coverage on your home and auto policies to become eligible for an umbrella policy.

First, it is important to know that an umbrella policy, your home and your personal auto policies do not protect against business-related risks. If you have business-related risks, be sure to discuss your coverage needs with your agent or broker.

In most cases, you will also need higher liability limits on your home and auto policy. In effect, those policies provide the first coverage, and the umbrella is there to expand that coverage if needed, by offering a higher limit or extending the coverage to libel or slander.

For the most part, an umbrella policy provides the same liability coverages as your existing home and auto policies, but extends your coverage limits affordably. This means that common risks like auto accident injury liabilities or accidental injuries to others at your home (or even when not at home) are protected by coverage limits which are extended by $1 million, $5 million, or more.

Liability is the one risk that is impossible to predict and it can often be the costliest types of claims. To review your coverage options, including umbrella coverage, just reach out to your broker to schedule a review.