Umbrella insurance

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Umbrella insurance refers to insuring more than one property as opposed to insuring only one. For example the owner might get a discount for insuring both his house and car rather than insuring them with separate policies because it might cost more. Typically, an umbrella policy is pure liability coverage over and above the coverage afforded by the regular policy, and is sold in increments of one million dollars. The term "umbrella" is used because it covers liability claims from all policies underneath it, such as autos and homeowners policies. For example, if you have an auto insurance policy with liability limits of $500,000 and a Homeowners policy with a limit of $300,000, then with a million dollar umbrella, your limits become in effect, $1,500,000 on the auto policy and $1,300,000 on a homeowners liability claim. Umbrella policies are mainly used by those who have sizable unencumbered assets, such as a home with a large amount of equity to ensure that even a catastrophic claim will not allow those assets to be placed at risk.

Umbrella insurance provides broad insurance beyond traditional home and auto. It:

• Provides additional liability coverage above the limits of your homeowner's, auto, and boat insurance policies.
• Provides coverage for claims that may be excluded by other liability policies including:
  • False Arrest
  • Libel
  • Slander
  • Invasion of Privacy
  • Liability coverage for rental units you own.

Umbrella insurance often offers two options:

• Option A covers the insured for all the above listed scenarios.
• Option B covers the insured in the case of an uninsured motorist accident.