Definition
An umbrella policy provides additional liability coverage beyond homeowners insurance limits, typically $1-5 million. It's cheap insurance for major claims.
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Umbrella policies cover liability claims exceeding your underlying homeowners and auto insurance limits, typically up to $1-5 million. They cost relatively little ($150-400 annually) for substantial additional protection. Umbrella policies cover legal fees, damages, and medical expenses from liability claims. They're especially important for property owners, landlords, or those with significant assets. Umbrella policies typically require minimum underlying coverage limits (usually $300,000-500,000 homeowners liability).
Pro Tip
Purchase umbrella insurance if you have significant assets. Compare coverage to net worth for adequate limits.
Example
A homeowner with $300,000 homeowners liability and $1 million umbrella coverage was protected up to $1.3 million total.