What is umbrella insurance?

If you’re looking to protect significant financial assets, umbrella insurance is a necessity. Umbrella insurance provides additional coverage above and beyond the limits of your homeowners, auto and boat insurance policies, as well as personal liability protection not covered by other policies.

Here are five ways umbrella insurance can protect you from financial disaster in the event of an outsized claim.

Additional liability coverage

Homeowners insurance

Your homeowners insurance policy’s liability coverage is likely enough if a single person were to get injured on your property, but what if an accident were to affect multiple people? It may be unlikely, but if you regularly entertain large groups of people, it’s not outrageous to think that a single accident could easily exhaust a $300,000 or $500,000 liability limit.

Umbrella insurance pays an additional liability amount up to its own limit. With limits typically increasing in million-dollar increments, umbrella insurance is designed to protect you from just such a scenario.

Auto insurance

In New Jersey, bodily injury liability coverage maxes out at $250,000 per person and $500,000 per accident, while property damage liability coverage goes as high as $100,000. You may not think you need more coverage, yet car accidents make up nearly four-fifths of all umbrella insurance claims.

Young drivers and old drivers are especially prone to accidents and can benefit the most from umbrella insurance’s additional liability coverage.

Boat insurance

Boating presents a whole host of unique hazards not present on land. There’s no such thing as a minor boat accident; even the slightest collision has the potential to be catastrophic, and some boats have the capacity to carry many passengers who might be affected.

Boat insurance policies usually have higher liability limits than auto policies—sometimes up to a million dollars—but that’s still not enough to protect you if you’re ever at fault in a major incident. Umbrella insurance can cover claims many times greater than your boat insurance policy alone can.

Other personal liability coverage


Umbrella insurance is sometimes called lawsuit insurance. It helps you if you lose a lawsuit and the plaintiff is awarded more than your standard liability coverage will cover.

Slander and libel

Slander and libel suits regularly seek millions of dollars in damages and aren’t covered by other types of insurance. Umbrella insurance is the only way to protect yourself from such a possibility.

Dog bites

Dog bites are typically covered under your homeowners insurance policy, but umbrella insurance can provide additional coverage, especially if you own a dog breed that’s high risk.

Rental units

If you rent out property, you’re responsible for keeping it safe for tenants and visitors. Umbrella insurance can protect you in the event of an accident or an injury to a tenant or guest, or if a third party sues you for damages your tenants cause.