Understanding Umbrella Liability Coverage

There are two types of liability insurance coverage that provide protection above and beyond the basic liability coverage available in home, auto, renters policies and the like:

• Excess Liability Policy
  This policy provides additional liability coverage - in excess of what is provided by your primary insurance policy - for the exact same things that are covered in that policy. If certain situations, conditions or circumstances are excluded from your primary insurance policy, they will also be excluded from coverage under your Excess Liability policy. All Excess Liability policies require you to maintain a minimum level of liability coverage through your primary policies; you must make sure that level of coverage is actually in place in order for your Excess Liability policy to respond.


• Umbrella Liability Policy
  In addition to providing excess liability coverage for the situations specified in your primary policy, an Umbrella Liability policy provides coverage for some additional situations not generally included in other policies. They include such things as worldwide automobile liability; unintentional personal injury such as libel, slander, or defamation; and first-dollar legal defense expenses. All Umbrella Liability policies require you to maintain a minimum level of liability coverage through your primary policies; you must make sure that the minimum level of coverage is actually in place in order for your Umbrella Liability policy to respond.

How much is enough?
Many people are concerned about how much umbrella liability coverage to buy, fearing they could “lose everything” in a lawsuit if not adequately covered. To help them consider how much they may need, they should ask themselves the following questions:

• What’s my net worth? How much do I need to protect?
• What are my exposures?
  For example, do I have several youthful drivers in my family? Do I own homes in several locations? Do I own a boat or other items that generate greater risks?
• What is my visibility in the community? Do people perceive that I am “worth a lot?”