Umbrella insurance is an excess liability that goes beyond the limits of your basic liability policy for either your auto, home, or business insurance.
There are two types of an umbrella insurance, personal and commercial. In general, umbrella insurance is designed to help protect you and/or business up to the policy limit from lawsuit claims and as a result helps protect your assets from an unforeseen event, such as a tragic accident in which you are held responsible for damages or bodily injuries.
It is recommended to have umbrella insurance if the total value of your assets, including ordinary checking and savings accounts, retirement and college savings and investment accounts, and home equity is greater than the limits of your auto or homeowner’s liability. A general rule to apply is to have enough liability insurance to fully cover your assets so you can’t lose them in a lawsuit. This coverage doesn’t just protect the policyholder, but also members of your family or household.
Commercial umbrella insurance is a separate policy than a personal umbrella insurance. If you want to protect your business beyond the limits of your basic business liability policy, you must purchase a separate policy.
It’s important to know that personal umbrella insurance doesn’t protect your personal property, this is a liability coverage, so it protects someone else’s property if you are responsible for damages or injuries. Remember to have enough coverage for your homeowner’s policy for your personal property.
Personal umbrella insurance is fairly cheap compared to other insurance policies.