Umbrella Insurance Policy

AAA

DEFINITION of 'Umbrella Insurance Policy'

Extra liability insurance coverage that goes beyond the limits of the insured's home, auto or watercraft insurance. It provides an additional layer of security to those who are at risk for 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. An umbrella insurance policy is very helpful when the insurance owner is sued and the dollar limit of the original policy has been exhausted. The added coverage provided by liability insurance is most useful to individuals who own a lot of assets or very expensive assets and are at significant risk for being sued.

INVESTOPEDIA EXPLAINS 'Umbrella Insurance Policy'

The premium for an umbrella insurance policy may be less expensive if the policy is purchased from the same insurer that provided the original auto, home or watercraft insurance. Depending on the provider, the policyholder who wants to add umbrella insurance policy is required to have a base insurance coverage of $150,000 to $250,000 for auto insurance and $250,000 to $300,000 for homeowners insurance.

RELATED TERMS
  1. Wrap-Up Insurance

    A liability policy that serves as all-encompassing insurance ...
  2. Issue Age Policy

    An insurance policy whose rate is dependent on the age of the ...
  3. Umbrella Personal Liability Policy

    A type of insurance policy that provides excess coverage above ...
  4. Constructive Total Loss

    A constructive total loss is an insurance term where the cost ...
  5. Canadian Council Of Insurance Regulators ...

    An association that was created to advocate for an effective ...
  6. Bumbershoot Policy

    A specialized form of liability insurance. A bumbershoot policy ...
Related Articles
  1. Understanding Your Insurance Contract
    Insurance

    Understanding Your Insurance Contract

  2. The History Of Insurance
    Home & Auto

    The History Of Insurance

  3. 15 Insurance Policies You Don't Need
    Insurance

    15 Insurance Policies You Don't Need

  4. It's Raining Lawsuits: Do You Need An ...
    Home & Auto

    It's Raining Lawsuits: Do You Need An ...

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center