Q: What is a personal umbrella liability policy?
A: The personal umbrella liability policy is designed to increase your liability protection. This single policy is an extra liability insurance coverage that acts as an “umbrella” over all of your other personal liability policies — home, auto, boat, RV, etc. — so you have a higher personal liability limit than what would otherwise be available. In certain circumstances, an umbrella policy may provide personal liability coverage that is otherwise excluded from your other policies. For example, your auto policy may only provide coverage in the US and Canada. With an umbrella policy your coverage may be extended internationally whether you are driving a Ford Focus in the United States or a Hyundai Sonata in Korea. Basically, your umbrella insurance policy covers the gaps in your other insurance policies.
Q: How do I know if I need a personal umbrella liability policy?
A: It used to be that the only people who needed personal umbrella liability policies were wealthy individuals who had sizable amounts of personal assets that would be at risk in a lawsuit.
However, in our very litigious society, even individuals with modest incomes and assets are often subjects of large lawsuits. Since they are even less able than a wealthy individual to pay large damage awards, they recognize the need to have coverage limits greater than what can be obtained from their homeowner or auto policies.
Contributor: Smruthi Sriram