An umbrella policy is a type of insurance that helps to protect you against large liability claims. It does this by both extending coverages beyond the limits in your homeowners or other insurance policies as well as covering events that might be excluded from those policies.
An umbrella policy is a good idea for anyone, but it is important coverage for people who have assets that could be at risk in a lawsuit. This includes homeowners and people who have large assets that are outside of a protected account such as a 401(k).
An umbrella policy is a type of supplemental liability policy, meaning it only kicks in if other insurance has been exhausted or the event is something that is excluded from another policy. Once a claim is either rejected by your insurer or the policy limit is reached, then you can submit a claim to your umbrella insurer.
Umbrella insurance policies are all very similar, although they may vary in what they cover. Most policies cover injuries, property damage, and personal liability. The personal liability coverage may include coverage for lawsuits alleging slander, libel, or other non-injury situations.
The main benefit to carrying an umbrella policy is the additional coverage it provides above and beyond your other liability insurance policies. This helps to ensure that you will not be on the hook financially for judgments against you that exceed limits from or aren’t covered by your home, auto, or other insurance policies.
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