An umbrella policy provides protection to the insured against losses that would exceed the limits of affordable primary coverage. An umbrella policy also insures against certain risks that a concurrent primary policy does not cover. As secondary coverage, it protects more than one property or asset with an extra layer of liability protection. In order to have a personal umbrella policy, you will be required to have home or renters insurance in addition to your auto policy and carry a minimum of $250,000 liability coverage on your underlying policies.
For example, if the liability limits are exhausted on your auto insurance, your umbrella insurance would take over and provide you with an additional protection up to the level of coverage you purchased. If you have $500,000 liability coverage on your auto policy and $1 million umbrella coverage, your total auto liability coverage is increased to $1.5 million.