An umbrella insurance policy is additional coverage over and above what's included in your current home and auto insurance policies.
Why Do I Need An Umbrella Policy?
Let's look at a real life example: Let's say you are in an auto accident, or someone has an accident at your home, and you are then sued for $1 Million. Your home or auto insurance policy allows coverage for up to $500,000. If you lose the lawsuit, you're then obligated to pay the other $500,000. Your material assets, nest egg, retirement savings, and future earnings may all be at risk, unless you have a Personal Umbrella Insurance policy.
What Does A Personal Umbrella Policy Cover?
Personal Liability Coverage - Slander, libel, defamation of character, false arrest, malicious prosecution, mental anguish, pain and suffering, and more
Worldwide Coverage - If you travel abroad, so does your insurance
Vacation Rental Liability - Boats, Scooters, Jet Skis, and other rentals
Defense Coverage - Legal costs such as attorney's fees
Bodily Injury Liability - This could be injures caused by an auto accident in which you were at fault, injuries sustained on your property, or caused by your dog.
Property Damage Liability - This is loss or damage to another person's personal property, such as their car, home, or other property. This can also include damage caused by your pet or child.
In summary, if you own anything, you should have a Personal Umbrella Insurance policy to protect it from litigation that may extend beyond the financial limits of your home and auto insurance policies.