How Personal Umbrella Insurance Works

Umbrella policies cover damage claims that you, your dependents or even your pets may cause. Your umbrella policy starts paying out after the liability insurance in your homeowners or auto policy runs out. For example, if you have a home insurance policy with liability coverage of $300,000, the umbrella policy will pay claims above $300,000, up to the limit you select, such as $1 million. Or if your liability limit on your car insurance policy is $250,000 of bodily injury protection per person and $500,000 per accident, your umbrella coverage kicks in after you exhaust that coverage.

Umbrella policies are relatively inexpensive as the majority of claim risk is paid by your primary policies.