Umbrella Insurance
Definition
A personal liability policy that provides coverage above and beyond the limits of your homeowners and auto policies. Umbrella policies typically start at $1 million in coverage and are relatively inexpensive because they only pay after your underlying policy limits are exhausted. They also cover some claims excluded by underlying policies.
When This Matters
You cause a serious car accident resulting in $800,000 in injuries. Your auto policy covers $300,000. Your $1 million umbrella policy covers the remaining $500,000.
Related Terms
Have a question about umbrella insurance?
Ask the Professor about Umbrella Insurance →