General
Umbrella Insurance
Extra liability coverage that kicks in once your home or auto liability limits are exhausted.
What it actually means
An umbrella policy sits on top of your existing home and auto liability coverage, adding an extra layer (commonly $1M or more) once those underlying limits are used up. It's inexpensive relative to the protection and matters most once you have real assets, like home equity or savings, to protect from a lawsuit.
Example: If a $500,000 lawsuit exceeds your $300,000 auto liability limit, a $1M umbrella policy covers the remaining $200,000.
See it in context
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Related terms
Liability CoverageBodily Injury LiabilityNet Worth (in insurance planning)