What Is Umbrella Insurance?

There are two types of umbrella insurance — commercial and personal — and both are considered supplementary to primary, or underlying, policies. Umbrella policies provide critical additional coverage that is often overlooked.

A commercial umbrella is designed to protect your business from liability risks related to its operation. It is purchased to add coverage to standard business policies.

A personal umbrella is designed to protect your personal assets from liability claims, particularly in scenarios where you may be held liable for damages. A personal umbrella is often purchased as a supplement to homeowners, auto or renters insurance, because it can cover amounts above the limits (maximum reimbursement) on those standard policies. In the case of a lawsuit filed against you, umbrella insurance can pay for both legal fees and damages you are found responsible for up to your policy limit.

Umbrella insurance can also fill in certain gaps in coverage.

Whether you need personal or commercial umbrella coverage, Almeida & Carlson can analyze your complete liability picture — including the inherent geographical risks you face — and recommend an individualized insurance plan for you. 

What Does Umbrella Insurance Cover?

An umbrella policy is different from other primary forms of insurance because it does not cover your own property. Rather, it protects you financially from claims of damage to others’ property; it also protects you financially if you are found legally responsible for a bodily injury to another person.

For example, if you’re at fault in an auto accident, or a neighbor is injured in your home, a liability claim against you could exhaust the limits (maximum reimbursement) provided by your underlying policy. That policy would usually be your homeowners, auto, renters or condo insurance, whichever is applicable. This is when you can turn to your umbrella policy for additional coverage or what’s called “excess liability coverage.” Without this additional coverage, you must pay any amount due beyond your underlying policy limits yourself.

Your umbrella policy also can cover your legal fees in the lawsuit and pay for a settlement if you are sued for libel, slander, or defamation.