What is Umbrella Insurance?

It is a special type of liability insurance policy that provides coverage well beyond that of your regular insurance.   Basically, one would purchase this type of policy if they wanted an additional amount of coverage over all other existing policies, hence the title umbrella insurance.  This insurance usually is sold in increments of $1,000,000. In example, if one has auto, life, health, and homeowners insurance policies each at $200,000, if they had to make a claim on any one of those, it would be for up to $1,200,000.  Many times certain types of insurance can’t cover above a certain amount of money.  With umbrella insurance, this problem can be avoided.

Although umbrella insurance is extremely expensive, it’s flexibility to cover over any of your existing policies makes it well worth it.  As if that’s not enough, it can also provide coverage on certain claims not usually covered by ones regular insurance, such as false arrest, invasion of privacy, or even slander.  Overall, umbrella insurance is a great safety net to have.

Sources:

http://en.wikipedia.org/wiki/Umbrella_insurance

http://answers.yahoo.com/question/index?qid=20070811152039AAZHVXb