What Is Umbrella Insurance?

Umbrella insurance pays homeowners when they take a loss exceeding what their regular homeowners insurance or auto insurance is willing to cover.

March 28, 2020 by Dan Green

“Umbrella insurance” is a generic term. You may know it by another name.

Four common names for umbrella insurance are:

  • Excess Liability Policy
  • Personal Liability Insurance
  • Personal Liability Umbrella Insurance
  • Personal Umbrella Policy

Umbrella insurance is a must for homeowners.

Umbrella insurance kicks in where your regular homeowners insurance and auto insurance coverage caps out. It pays cash to protect you from the injuries you cause to others. It also protects against excessive property damage; and, from lawsuits filed against you for injury or death which can easily exceed $1,000,000.

Umbrella insurance protects against bankruptcy.

Some examples:

  • Your dog injures a guest in your home
  • An injury caused by a babysitter’s negligence
  • Child’s friend bounces off a backyard trampoline and breaks an arm

Umbrella insurance also pays on damages awarded in a courtroom which means it’s protection against wage garnishment, a mandatory paycheck deduction used to pay debt.

When you buy your house, you’ll purchase homeowners insurance to cover. At the same time, make sure to purchase an accompanying umbrella insurance policy, too. Policies are inexpensive and protect you against millions of dollars in damages.

Umbrella insurance protects the money you have today, and the money you’ll earn tomorrow. Policies of $1,000,000 are relatively cheap.

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