An umbrella insurance policy or a personal excess umbrella policy is an additional policy you can purchase that adds additional liability protection to your underlying policies (homeowners, auto, boat, motorcycle, vacation home etc.). If the limits of your underlying policy are exceeded, your umbrella will cover the balance of the claim up to it’s limits. So, for example, if you are responsible for a serious car accident where someone is paralyzed or killed, you will most likely be sued. Let’s say if the court awards the plaintiff $750,000, your auto insurance will pay it’s limits and the umbrella will pay the rest. You can buy an umbrella with limits starting a 1 million and up to 10 million for little cost. The average 1 million umbrella policy with 2 cars and a home start at $120 a year.
Nearly everyone who drives, owns a home or has assets that can be taken away in a lawsuit, needs an umbrella.