Although we think and hope we’ll never get sued and need liability insurance, the sad truth is that it could happen. With lawsuits often paying out in six-figure amounts, conventional insurance policies may not offer enough liability insurance. Here is where umbrella policies come in handy.

What It Is?

Umbrella insurance is extra liability insurance. It offers you liability coverage above and beyond the limits on your main insurance policies. It can be used with your homeowner’s, auto, renters or bike insurance. It may also provide coverage for claims that may not be covered by other liability policies, such as slander, libel, and false arrest. Umbrella policies can only be purchased as additions to your regular policy.

Who It’s For?

Umbrella policies are for anyone who already has liability insurance but is concerned that there may not be enough coverage if there was a lawsuit. It’s also beneficial for individuals who are at higher risk of being sued. Umbrella policies are the most popular form of insurance for business owners to who fear they may be sued.

How it Works?

As stated above, umbrella policies are additional liability insurance policies, but they can only be used after you’ve exhausted your primary insurance coverage. For instance, you have $100,000 in liability insurance on your homeowner’s policy and $300,000 on your umbrella policy. You’re sued for $200,000. Since your main policy only covers $100,000, your umbrella policy pays the additional $100,000. Without the umbrella policy, you could lose your home, business and everything you’ve worked for. It covers, injuries, property damage and certain lawsuits.

Different Types of Coverage

Umbrella policies typically offer the following types of coverage. Bodily injury liability – pays for injuries to others while they are on your property Property damage liability – pays for damages to someone else’s property when you are at fault Owners of rental units – provides protection to landlords who rent apartments to other should they choose to sue you Benefits The main benefit to having umbrella insurance is that it offers the security of knowing that if you are sued, you’ll have sufficient coverage to pay the lawsuit if you lose.