What is umbrella insurance coverage?
An umbrella policy is meant to cover claims that are big, so it offers excess coverage over the limits of your home, auto, or other existing policies. Major accidents and injuries can result in massive court and medical bills that go beyond your normal policy limits. Umbrella insurance is the safety net in the event something major happens.
Insurance is always there to protect you, but depending on your plan, there may be times when an astronomical cost exceeds what your current plan can provide. If you don't have the right coverage at the time of the accident, you may end up in debt and get caught in making payments for years.
For example, someone falls at your home and injures themselves very badly. If your homeowners policy has liability coverage at $300,000 and the person ends up having $500,000 in medical bills, an umbrella policy would be able to cover the excess amount on the bill. Without it, you'd have to pay the extra $200,000 out of pocket because you would hit the $300,000 limit on your homeowners policy.
Many home and auto policies may list out exclusions. If an incident occurs that falls outside of your auto or home coverage, an umbrella policy can rescue you. Additionally, your umbrella policy may be applicable to lawsuits brought against you related to slander and libel.