What is an Umbrella Policy?


umbrella-policyLike an actual umbrella, Umbrella Insurance covers “everything.” Essentially, it is extra liability insurance.

Umbrella insurance is designed to help protect you and your assets from major claims and lawsuits. It does this in two ways:

  1. Umbrella insurance provides additional liability coverage above the limits of your homeowners, auto, and boat insurance policies. This protection comes into play if and when the liability on these other policies has been exhausted.
  2. Provides coverage for claims that may be excluded by other liability policies including: false arrest, libel, slander, and liability coverage on rental units you own.

What does Umbrella Insurance Cover?

Umbrella insurance provides coverage for:

  • Injuries to others
  • Damage to someone else’s property
  • Certain lawsuits
  • Personal liability situations listed below.

If you have auto and homeowners insurance you have a certain level of protection in place now that covers some of these situations. But umbrella insurance insures you above and beyond the limits of those policies and covers some situations that aren’t covered by the other types of policies.

Here are examples of the types of coverages provided by an umbrella policy and how they protect you:

Bodily Injury Liability – covers the cost of damages to another person’s body. Examples include the cost of medical bills and/or liability claims as a result of:

  • Injuries to other parties due to a serious auto accident where you are at fault
  • Harm caused to others as a result of your dog(s) or other animals
  • Injuries sustained by a guest in your home due to a fall
  • Injuries sustained by a neighbor’s child who falls while playing in your yard

Property Damage Liability – covers the cost of damage or loss to another person’s tangible property. Examples include the cost associated with:

  • Damage to vehicles and other property as a result of an auto accident where you are at fault
  • Accidental damage to school property caused by your child (hey, you can’t disown them)

Owners of Rental Units – helps protect against liability that you may face as a landlord. Examples include the cost of liability claims as a result of:

  • Someone tripping over a crack in the sidewalk of your rental property and suing you for damages
  • Your tenant’s dog biting someone and you being held responsible for the injuries

Coverage is also provided should you be sued for:

  • Slander – injurious spoken statement
  • Libel – injurious written statement
  • False arrest, detention, or imprisonment
  • Malicious prosecution
  • Shock/mental anguish
  • Other personal liability situations


Let’s say you cause an auto accident and the cost of the injuries you cause to others is $500,000 – but the Bodily Injury limit on your auto insurance is $300,000. That leaves a gap of $200,000. Who will cover it? You will. But if you have an umbrella policy in place, it can take care of the remaining $200,000.

Have questions about an umbrella policy? We’ll happily help you understand your options