Umbrella insurance is a type of personal liability insurance that can be indispensable when you find yourself liable for a claim larger than your homeowner’s insurance or auto insurance will cover. If you own a boat, umbrella insurance will also pick up where your watercraft’s liability insurance leaves off.
Umbrella insurance even covers certain liability claims those policies may not, such as libel, slander, and false imprisonment, malicious prosecution, wrongful entry, invasion of privacy, and other hazards.
If you own rental property, umbrella insurance provides liability coverage beyond what your renter’s policy covers.
How Does an Umbrella Policy Work?
- Your dog runs out of the house and viciously attacks a neighbor who was going for a walk. Your neighbor sues you to cover her medical bills, lost wages, and pain and suffering.
- Your daughter gets into a fight at school and punches another girl, breaking her nose. The girl’s parents sue you.
- You cause a 10-car accident and your auto insurance property damage coverage is not high enough to replace all 10 accident victims’ vehicles. Nor is your personal liability coverage high enough to pay for their medical bills.
- You send sandwiches to your son’s school for a field trip lunch. Several students develop food poisoning and their parents sue you.
- Your teenager throws a party at your house while you’re out of town. Someone brings alcohol to the party, and one of the guests is arrested for driving under the influence on the way home. You are sued.