Question
What does umbrella insurance cover?
Short answer
Extra liability coverage on top of your home and car policies, usually $1 million or more, for when someone sues you for more than those policies pay.
How it works
Say you cause a crash and the other driver's injuries lead to a $700,000 judgment. Your car policy pays up to its liability limit, say $300,000. Without an umbrella, the other $400,000 can come from your savings and future wages. An umbrella policy pays that part.
Insurers require you to keep certain limits on your home and car policies first, for example $300,000 of personal liability. The umbrella starts where they stop.
What it usually covers
- Injuries and property damage you cause to others, at home, in your car and elsewhere.
- Your legal defense, often on top of the limit.
- In many policies, claims your other policies don't cover, like libel, slander or false arrest.
What it doesn't cover
- Damage to your own house, car or belongings.
- Your business activities. That needs a commercial umbrella.
- Harm you cause on purpose.
This is general information about how US policies usually work. Your own policy's wording and your state's rules decide the details.