What is umbrella insurance?

Umbrella insurance is a specialized type of liability insurance that provides an additional layer of protection beyond the limits of underlying insurance policies, such as homeowners, auto, or yacht insurance. It is designed to protect against significant claims and lawsuits, offering additional coverage for situations that may not be fully covered by standard policies. For example, if a policyholder is involved in an accident where damages exceed their auto insurance liability limits, the umbrella policy can kick in to cover those extra costs.

This comprehensive nature of umbrella insurance allows individuals and families to safeguard themselves from substantial financial risks, providing peace of mind in an increasingly litigious environment. It is especially useful for individuals with considerable assets or those at a higher risk of being sued, as it can effectively protect their wealth and future earnings from unexpected legal claims.