Delaney Simchuk, Car Insurance Writer
@delaney_simchuk
Umbrella insurance works by extending the liability limits on your auto or home insurance policy beyond the maximum limits insurance companies offer. Umbrella insurance protects you when you are facing serious financial loss and covers a broader range of situations than just auto or home insurance alone.
How Umbrella Insurance Works
- Extends your existing coverage. Umbrella insurance extends your existing liability insurance coverage so you have higher limits for both bodily injury liability and property damage liability. You are only eligible for an umbrella insurance policy if you have an underlying insurance policy beforehand.
- Covers drivers with a high net worth. Umbrella insurance policy limits start at $1 million and can go as high as $10 million.
- Protects you from potential lawsuits. When you are at fault for a serious car accident, your home, savings, and earnings are all at risk of being seized in a lawsuit against you. An umbrella insurance policy helps prevent lawsuits by covering the potentially expensive cost of repairs or medical expenses should you be held responsible for an accident or another liability claim.
- Covers more than just liability. Umbrella insurance covers a wide range of situations in addition to bodily injuries and property damage that you might be liable for. It can cover claims such as libel, slander, or defamation of character, for instance, along with your legal defense for covered claims, liabilities outside of the United States, lost income or false arrest, detention or imprisonment.
- Kicks in when your regular auto or home insurance limits are exhausted. For example, if you are at fault for a car accident, you will get coverage first from your auto insurance, and then your umbrella insurance policy will cover the rest up to your policy limits, minus any deductible.
To learn more, check out WalletHub’s guide to umbrella insurance.
People also ask
Is umbrella insurance worth it?
Yes, umbrella insurance is worth it if the value of your assets exceeds your liability insurance limits. Umbrella policies are relatively inexpensive so they are worth the investment if you have significant assets you’re looking to protect from costly liability claims.
Umbrella insurance provides additional liability coverage, typically starting at $1 million, and it usually costs at least $150 to $300 per year. Umbrella policies also cover certain situations that don’t typically fall under liability insurance,...
read full answerWhat does umbrella insurance cover?
Umbrella insurance covers injuries, property damage, certain lawsuits, and personal liability situations that exceed your home and auto liability coverage. An umbrella policy extends your liability insurance limits and offers protection for situations not covered by a standard liability policy, such as libel or slander.
On the other hand, umbrella insurance does not cover claims that are excluded outright from liability insurance, such as intentional damage or damage to your own property.
What Umbrella...
read full answerWhat is not covered by an umbrella policy?
An umbrella insurance policy does not cover your own injuries or damage to your personal property. In addition, personal umbrella insurance will not cover intentional acts, criminal behavior, damage caused while you’re performing business activities, or damage from certain dogs or vehicle types. If you need umbrella insurance for business purposes, you can purchase a commercial umbrella policy.
What Umbrella Insurance Does Not Cover
- Your own injuries or property damage
- Property damage or...
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