What It Is:
Anybody can benefit from having umbrella coverage, but it is especially important for homeowners and people who have a lot of assets that could be at risk from a lawsuit.
Say you get into a serious car accident that injures another person. That person winds up in the hospital and racks up $300,000 in medical bills. It turns out that you have a coverage limit on bodily injury in your auto insurance policy of $250,000. If you have an umbrella policy, it would kick in at that point and pay for the additional $50,000 that is above your policy limit. If you think your umbrella coverage might be needed, it's a good idea to contact your insurer to see about the steps for filing a claim.
Umbrella policies are all very similar and typically cover the same types of liability, including personal injury, property damage and instances of libel or slander. Policy limits usually are in the range of $1 to $ million, but you may be able to get more coverage if you are willing to pay for it.
The top benefit of umbrella insurance is the additional liability coverage you get, which covers you should an accident you are responsible for cause damages that exceed the limits in your other policies. Another benefit is that umbrella policies are relatively cheap for the amount of coverage you get.