What does an umbrella policy provide?

An umbrella policy is designed to provide additional liability coverage beyond the limits of existing insurance policies, such as auto or homeowners insurance. This type of policy acts as an extra layer of protection, which is particularly valuable in the event that a claim exceeds the limits of those primary policies.

For instance, if an individual faces a lawsuit resulting in damages that surpass their homeowners or auto policy limits, an umbrella policy can cover the excess amount, helping to safeguard personal assets. This feature makes umbrella policies especially appealing for those with considerable assets or those who may be at a greater risk for liability claims.

While basic liability coverage and protection for high-value property are important aspects of homeowners and auto insurance policies, they do not provide the additional layer of security that an umbrella policy offers. Additionally, comprehensive coverage is not applicable in the context of an umbrella policy, as such policies do not cover all types of losses but specifically focus on liability risks beyond the existing coverage.