The definition of an Umbrella Policy is pure liability coverage over and above the coverage afforded by the regular policy and is sold in increments of one million dollars. The term umbrella is used because it covers liability claims from all policies underneath it, such as auto and homeowners insurance policies.

For example, if you have an auto insurance policy with liability limits of $500,000 and a homeowner’s insurance policy with a limit of $300,000, then with a million dollar umbrella, your limits become in effect, $1,500,000 on an auto liability claim and $1,300,000 on a homeowner’s liability claim”.


Generally, those needing this type of coverage are as follows:

  • Small business owners who want to protect their personal assets against lawsuits.
  • Homeowners who want to protect themselves against lawsuits if someone injures themselves on their property.
  • Those with a great deal of assets.
  • Parents with young drivers on their insurance for a greater sense of security.

Umbrella policies are usually very inexpensive and can add peace of mind in protecting you and your family.  Let your insurance agent help you determine whether you need this type of insurance or not.  It is best to have all your insurance under the same insurance company in order to take advantage of the best rates.