Umbrella insurance
Extra liability coverage that kicks in when your home or auto policy limits are exceeded.
Full definition
An umbrella policy provides an extra layer of liability protection on top of your existing home, auto, and other policies. It activates when those underlying policy limits are exhausted. A $1 million umbrella policy typically costs $150–$300/year — extremely cost-effective protection against a serious lawsuit. Most insurers require you to have minimum liability limits on underlying policies to qualify.
Real-world example
You cause a multi-car accident with $380,000 in total liability. Your auto policy limit: $300,000. Your umbrella pays the remaining $80,000, protecting your savings and assets.
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Extra liability coverage that kicks in when your home or auto policy limits are exceeded.
Related terms
- Liability insurance
Coverage that pays for damage or injuries you cause to others.
- Coverage limit
The maximum amount your insurer will pay for a covered claim.
- Personal liability coverage
Pays if someone sues you for injury or property damage you're responsible for.