If you are ever sued, your home or auto policy will provide you with some liability coverage, paying for lawsuits against you and your lawyer’s fees, up to a limit set in the policy. However, in our society, you may want to have an extra layer of protection. That’s what an umbrella insurance policy provides.
An umbrella insurance policy kicks in when you reach the limit on liability coverage in a homeowners, renters, and condo or auto policy. It will also cover you for things such as libel and slander.
Because the umbrella insurance policy goes into effect after the other coverage is exhausted, there are certain limits that usually must be met in order to purchase this coverage. Most insurance companies will want you to have about $250,000 of liability insurance on your auto policy and $300,000 of liability insurance on your homeowner’s policy before selling you an umbrella insurance policy for $1 million of additional coverage.