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Definition
Umbrella insurance is personal liability coverage that sits above the limits of your auto and homeowners policies, paying out for catastrophic claims once those underlying policies are exhausted. It's typically sold in $1 million increments, so you can stack additional layers of protection as your assets grow. To buy an umbrella policy, you generally must carry certain underlying liability limits first on your auto and home coverage, since the umbrella only responds after those primary limits are used up. This makes it a cost-effective way to protect against large lawsuits or judgments that could otherwise reach your savings, home, or future income. The exact required underlying limits and pricing vary by state and insurer, so confirm the specifics with your agent before assuming you're covered.
Also Known As
Personal umbrella policy
Excess liability insurance
Umbrella liability coverage
PUP
Used in Context
- After an at-fault crash with serious injuries exceeded her auto policy's limit, her umbrella insurance covered the remaining damages.
- A homeowner with significant savings added a $1 million umbrella policy to protect his assets from a potential lawsuit.
- Shoppers comparing higher liability options through Dreamy Leads often ask whether they qualify for umbrella coverage on top of their existing policies.
How does umbrella insurance work with my other policies?
Umbrella insurance sits above your auto and homeowners policies. When a covered liability claim exceeds those underlying limits, the umbrella pays the difference up to its own limit, typically sold in $1 million increments. It only responds after the primary policy limits are exhausted, which is why underlying coverage is required first.
Do I need a certain amount of car or home insurance first?
Yes. Umbrella policies require you to carry certain underlying liability limits on your auto and homeowners coverage before they apply. Those minimum required limits vary by state and insurer. Confirm the exact thresholds with your agent, since failing to maintain them can leave a coverage gap below the umbrella.
What kinds of claims does umbrella insurance cover?
Umbrella insurance is designed for catastrophic liability claims, such as large lawsuits or judgments tied to your auto or home liability. It applies above your underlying policy limits. Specific covered events and exclusions vary by policy, so review your terms carefully to understand exactly what your umbrella does and does not cover.
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