Umbrella Insurance Definition

An umbrella insurance policy is an extra layer of liability insurance coverage that goes beyond the limits of the insured's homeowner’s, auto, business, or watercraft insurance. It guarantees an additional layer of protection to those who are at risk of being sued for damages to other people's property or injuries caused to others in an accident. It also protects against libel, vandalism, slander, and invasion of privacy. To own umbrella insurance, you must first own a standard homeowner’s, auto, or watercraft policy; the umbrella policy kicks in after the regular coverage has been exhausted. Candidates for umbrella insurance include people who possess considerable assets or potentially hazardous things, as well as those who engage in activities that could increase their risk of being sued.