What is umbrella insurance for homeowners?
Umbrella policies were created to provide you with coverage in certain situations when your home insurance’s personal liability coverage did not offer any coverage. This gave rise to the policy’s name, as it was considered an “umbrella” that would provide broader coverage than other insurance policies, shielding you from liability.
Today, an umbrella policy is a liability policy that protects you with high limits of liability. This is added onto the liability limits provided on your homeowners insurance policy. Most home insurance policies contain coverage for your personal liability in the amount of $100,000 or $300,000, but if you wish to purchase more limits to protect yourself from liability claims, you can purchase an umbrella policy, which commonly provides $1,000,000 in liability limits. An umbrella policy can also provide additional limits of liability coverage for you on your other policies, such as automobile liability.