- by C.C.
Insurance policies pay your legal bills and damages if you cause injury to others — but only up to policy limits. Unfortunately, those policy limits are sometimes not high enough to cover all the costs you incur if something goes wrong.
That’s where umbrella insurance comes in. Umbrella insurance pays additional costs above and beyond what other insurers cover if you’re found liable for losses.
If someone is killed at your home or in a car crash and their family is awarded $1 million in damages but your auto or homeowners policy has a $250,000 limit, your umbrella policy could pay the other $750,000 in damages.
Umbrella policies are an affordable way to get a lot of additional protection. However, these policies typically require you to carry at least a certain minimum amount of coverage with your other insurance carriers. They are extremely important to protect assets because otherwise, a judgment against you could lead to wage garnishment or liens on your property if your insurance isn’t sufficient to cover damages you’re held responsible for.