What’s an umbrella policy?

If your insurance is properly set up, it should be enough to protect you in most situations. But what happens if someone sues you for an amount higher than your coverage limit?

That’s where an umbrella policy comes to your rescue. An umbrella policy sits on top of your home, auto and watercraft policies and provides excess coverage above your current limits. It’s an affordable way to boost your coverage without increasing limits (and therefore costs) on each individual policy.

For example, most standard auto policies provide $1 million worth of liability coverage. If you were to get into an accident and as a result someone sued you for $2 million, the umbrella would cover the million not covered under the base policy.

Umbrella policies are well suited for individuals with an increased likelihood of being sued such as corporate and nonprofit board members, volunteer workers, and anyone publishing content or doing volunteer work.

They’re also a good option for anyone with an elevated risk exposure. For example, if you have a pool, or children.

One unique aspect of umbrella policies is that they provide worldwide coverage. This is a big deal for frequent travelers. If you’re renting a car overseas, the rental company may provide some collision coverage, but you will still be on the hook for injury and damage you cause to third parties. An umbrella could cover you in that situation.

However there is one catch in that most insurers require you to have all of your policies with them in order to qualify for umbrella. But there are exceptions and we recommend speaking with your insurance broker to get all the details.