What does umbrella insurance cover?

Umbrella insurance safeguards your assets if you’re responsible for injuries or damages and the amount you’re liable for exceeds the liability limits on your motor vehicle and homeowners policies. In addition to covering medical bills and property damage, an umbrella insurance policy may cover slander, libel, defamation, and the lawsuit costs. Umbrella insurance won’t cover your injuries or damages and typically only pays out when you’ve exhausted the liability coverage on your underlying policies.

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How does umbrella insurance work?

If you’re liable for an amount greater than the liability limits on your homeowners policy’s personal liability coverage or your auto policy’s bodily injury and property damage liability coverage, umbrella insurance can pay for the following:

  • Medical bills resulting from injuries you caused
  • Property damage you caused
  • Slander
  • Libel
  • Defamation
  • Attorney expenses and court costs

Find out if you need personal umbrella insurance.

Will umbrella insurance cover lawsuits?

When you’re negligent and sued above the limits of your auto insurance or homeowners insurance, a personal umbrella policy can cover the cost of the lawsuit and the amount you’re liable for.

Example:You’re hosting a pool party, and one of your guests is badly injured after diving in at the pool’s shallow end. Because there were no indicators that the water was shallow, you’re deemed to be negligent in a court of law and are liable for your guest’s injuries.

The hospital bills, attorney fees, and court costs total $900,000. Your homeowners policy may pay up to $500,000, which is your personal liability coverage limit, and your umbrella policy could pay the remaining $400,000.

What isn’t covered by an umbrella policy?

Umbrella insurance won’t cover your medical bills or damage to your property. Intentional harm to another person and criminal activities also typically won’t be covered by an umbrella policy.

If you’re a business owner and seeking additional professional liability coverage or general liability coverage, a personal umbrella policy won’t cover you. You may need commercial umbrella insurance to have additional liability protection for your business.

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