Simply put, umbrella Insurance is liability insurance that goes beyond the limits that one has in effect on their home or auto insurance policies. The purpose is to protect your income and assets in case of a major incident or lawsuit.

Most home and auto insurance policies will have liability coverage of $500,000 or, in many cases, much less.  So if you are involved in an accident, for example, that results in a lawsuit, your underlying limits may not be enough to cover the injuries, legal fees, lost wages, and other expenses that are covered.  This is when your umbrella policy would take effect.

Umbrella policies typically to start at $1,000,000 in coverage and in some cases can go as high as $25,000,000.  Umbrella coverage is one of the most inexpensive, as well as the most undersold policies in the industry.  In most cases you can obtain an umbrella policy for only a few hundred dollars per year, or less. The more assets, income, or potential income you have, the more coverage you should consider.

The term 'umbrella' is used because its increased liability limits cover claims from the policies that fall beneath it (such as auto and homeowner insurance).

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