What is an umbrella insurance policy?

An umbrella insurance policy offers additional liability protection above and beyond what is covered in standard home, auto, or boat insurance policies. This type of policy is designed to protect an individual’s assets and provide liability coverage in the event of claims and lawsuits that exceed the limits of their standard insurance policies. For instance, if someone is found liable for an accident and the damages exceed their auto insurance coverage, an umbrella policy can cover that additional liability, ensuring that the individual does not have to personally pay out of pocket for the excess. This makes it an essential financial safety net for anyone looking to protect their wealth from unforeseen events that lead to significant legal liability.

The other options refer to different types of coverage, such as home repairs and life insurance, which do not provide the same breadth of liability protection. Additionally, commercial property insurance specifically targets businesses and is not focused on personal liability, thereby differentiating it from the individual-oriented umbrella policies.