Umbrella insurance is a type of liability insurance that provides additional coverage above and beyond your existing policies. It’s designed to protect you from major claims and lawsuits that could wipe out your savings or even force you into bankruptcy. Umbrella insurance kicks in when the limits of your other policies are exhausted, giving you an extra layer of protection.
While everyone can benefit from the extra protection that umbrella insurance provides, it’s particularly important for those with significant assets or those who are at a higher risk of being sued. If you own a home, have a high net worth, or engage in activities that could put you at risk for a lawsuit (such as coaching a youth sports team), umbrella insurance can give you the added peace of mind you need to protect your financial future.
If you’re sued for a covered event and your other insurance policies don’t provide enough coverage, your umbrella insurance policy will kick in. For example, if you’re sued for $1 million and your homeowner’s insurance policy only covers up to $500,000, your umbrella insurance would cover the remaining $500,000 (up to the limit of your policy)
