Umbrella insurance sits above your auto, home, and other policies to cover claims that exceed their limits. If a $1.5 million wrongful-death suit exhausts your $500,000 auto liability, a $1 million umbrella covers the rest.
$500,000
$1.5 million
$1,000,000
An umbrella policy might actually cover broader coverage than the below. They call them underlying policies. Your trucking policy, your homeowner's policy, your auto policy, or cyber policy. So let's say I'm driving on the road and I am at fault. I hit somebody and they pass away here, their spouse is going to come sue me. What's going to happen first is my 500,000, that's what I have for liability limits, is going to pay out first in that claim. But let's say a lawyer finds out and they get a lawyer and they're like, life is worth more than 500,000, which pretty much every court case it is, they're going to come sue me for $1.5 million. Now my million dollar umbrella is going to pick up that extra million that my auto policy did not pick up.
