Umbrella insurance provides additional coverage beyond regular liability coverage in your homeowners, auto or other similar insurance policies. Umbrella insurance kicks in once the liability limits have been reached in your standard policies. For example, you are at fault in a motor vehicle collision that injures several people. The medical bills total $500,000 and that exceeds your $300,000 liability policy limits. If you had an umbrella policy, it would now come into play to cover the excess liability. Umbrella policies can help to protect you from losing personal assets as a result of lawsuits.
If your net worth is greater than the maximum liability coverage you can get from your standard insurance policies, then an umbrella policy can help protect your assets if you are found liable for certain incidents. Also, keep in mind that umbrella insurance usually provides coverage for things that are not covered in your standard auto or homeowner policy, such as: false arrest, imprisonment or detention; malicious prosecution; wrongful eviction or entry; and invasion of privacy. However, keep in mind there are also things that are not covered by umbrella insurance, such as: business losses; intentional acts; your own injuries; and damage to your personal property.
Umbrella insurance can be very beneficial in certain situations. So, if you think an umbrella policy may be right for you, but you’re not sure, contact an attorney to discuss further.