A big concern to holders of liability insurance policies is that they have insufficient coverage in the case of a claim. An ideal solution is purchasing an umbrella insurance policy. Learn more about this valuable and relatively inexpensive policy and how it can help you. 

What an Umbrella Policy is & Who it Covers

An umbrella policy provides extra coverage in addition to what you’d get from your liability insurance policy. It cannot be purchased as a separate policy but can be purchased once you already have a regular policy in place for a certain dollar amount. The umbrella policy is for the person or company that purchased the policy. 

Although they’re generally used by businesses, they may be purchased by individuals as supplemental insurance on homeowner and automobile policies. It can be used to pay for property damage, legal expenses, medical bills, and more. 

How it Works

Umbrella policies are different from other insurances because you can only purchase them if you already have another policy in place. It’s ideal for the individual who is being sued and has insufficient liability coverage on his or her main policy. Say an individual has a $100,000 liability insurance policy and an additional $100,000 on an umbrella policy. If the individual is sued for $200,000, the first half is paid through the regular policy, and the second half is covered by the umbrella policy. It’s a popular choice because it’s somewhat cheap to buy.