How does umbrella insurance work?

Umbrella limits typically range between $1 million and $5 million. There is liability protection for the policyholder as well as family members that live in the household. Attorney fees and court costs are also covered.

Because an umbrella provides excess coverage, supporting auto and homeowners insurance policies have minimum liability requirements. Auto limits of $100,000/$300,000 for bodily injury and $100,000 for property damage are common. A homeowners insurance liability limit of $300,000 is often necessary. There are similar stipulations if you own a boat, motorcycle, or recreational vehicle.

Look into an umbrella policy when auto and homeowners insurance liability limits are not high enough to protect your financial assets. Dog owners, those with a swimming pool or trampoline, amateur sports players, volunteer coaches, and high profile individuals may want to consider umbrella coverage too.

Umbrella policies have limitations. For example, there is no coverage for damage to owned property, an intentional act, or injury or damage related to business or professional work.