What Is an Umbrella Insurance Policy?

• March 25 2025
• |   Insurance

An umbrella insurance policy is an extra layer of protection that goes beyond your standard policies’ limits. This coverage is created and designed to safeguard you, a policyholder, from financial hardships that may come up due to unpredictable events. Unlike specific existing policies like auto or homeowners’ insurance, this policy offers broader coverage.

An umbrella insurance policy helps when costs exceed the limits of your primary policies, like auto or home insurance. The policy is a safety net that offers extended security when your standard policies fall short. By providing additional liability coverage, umbrella insurance protects you from the financial repercussions of unforeseen events when a claim has been made against you on behalf of the wronged party.

At Leverty & Associates Law, we know that accidents occur, and anyone can get sued even when not negligent. We also know that some insurance policies cannot cover the extent of some damages. This is where umbrella policies step in, and we have experienced attorneys who can help you through this process.

Why Hire Our Lawyers to Help You With Your Insurance Problems?

At Leverty & Associates Law, we have more than 50 years of experience protecting our clients’ rights. Aside from representing you in a lawsuit if you were injured or if your property was damaged, we can also give you advice on when and how you can get and use your umbrella insurance policy.

We have a team of experienced lawyers who can help you with your insurance problems. Your legal needs are our priority, and we can provide the professional and legal support you need. Contact us in Reno at (775) 322-6636 or Las Vegas at (702)507-0201 for a free consultation.

We know what is needed to win an insurance case and will apply our knowledge to your case to get the best possible outcome.

How Does an Umbrella Insurance Policy Work?

An umbrella insurance policy provides additional liability coverage that goes beyond the limits of your standard insurance policies. Umbrella insurance policies are triggered only when your existing or primary liability limits have been exhausted or when the claim is excluded from the basic liability coverage. There are also situations where existing insurance policies cannot be used or fall short.

For instance, if you cause a car accident and the injured person sues you for $1 million, but your auto insurance only covers $300,000, a $1,000,000 umbrella policy would pay the remaining $700,000.

Generally, umbrella insurance adds an extra layer of financial safety, making sure you don’t lose your savings, home, or future earnings if someone sues you for more money than your regular insurance can cover.

What an Umbrella Insurance Policy Covers

An umbrella insurance policy covers a lot. It covers many legal problems and provides monetary protection beyond the limits of existing insurance policies. Unlike primary policies, this insurance policy can include your immediate family.

However, an umbrella policy provides monetary assistance only when you are responsible for the damage or injury. For example, if a delivery person gets bitten by your dog because you didn’t keep it restrained, even though you knew someone was coming to deliver something, an umbrella policy would cover all the costs if you get sued for negligence.

The following are what umbrella insurance policies cover:

• Injuries to Other People: If someone gets hurt because of you, maybe in a car accident you caused, or if someone slips and falls at your house, an umbrella insurance policy will help you pay for their medical bills and legal costs if they sue you.
• Damage to Other People’s Property: If you accidentally damage someone’s property, maybe you hit another person’s car in an accident or break a neighbor’s fence, your umbrella insurance will help you pay for the repairs if your primary insurance does not cover everything.
• Lawsuits: If someone sues you for slander, for falsely accusing them of something, or causing them emotional distress, an umbrella insurance policy can help you pay for lawyers and any money you owe if you lose the case.
• Protection for Landlords: If you rent out a house or apartment and a tenant or visitor gets hurt and sues you, an umbrella insurance policy can help to cover legal costs and any money you have to pay.

One major thing you should know is that this policy does not cover your personal expenses, business losses, or anything illegal. It only protects you from liability claims. This means an umbrella insurance policy only helps when someone else makes a claim against you, and you need extra financial protection.

How Much Does Umbrella Insurance Cost?

When considering investing in an umbrella insurance policy, it is essential to evaluate your lifestyle, assets, and potential risks. Wealthy individuals, homeowners, or those with significant savings are encouraged to explore umbrella coverage because they are more likely to face lawsuits.

Umbrella insurance policies usually start at $1 million in coverage; depending on your needs and financial status, limits can be higher. To qualify for umbrella insurance, you must carry a minimum amount of underlying liability coverage on your primary policies.

When getting an umbrella insurance policy quote, your insurer will base the rate on factors such as:

• Your location
• The number of properties and vehicles you have
• Your credit score/history
• Your policy limit
• Your driving record
• The chances of your filing an umbrella insurance claim.

Why You Need an Umbrella Insurance Policy

There are some situations where having an umbrella insurance policy is much needed. If you are a wealthy individual or you have a wealthy family, you or your family can be easy lawsuit targets. You will need an umbrella insurance policy to protect your properties and assets from lawsuits. The umbrella policy is like buying extra protection and coverage for your assets.

If the damage to a property can be linked to you, or you caused an expensive auto accident that injures other people, some of your assets could be seized if you eventually lose the lawsuit. However, you do not need to be wealthy to have this type of insurance. As a policyholder, you might engage in activities or work jobs that could increase your risk of a lawsuit. For example, you might have hostile dogs as pets or own a swimming pool.

If you get sued, your umbrella insurance starts to pay out the moment your primary insurance liability limits are exhausted, and it will continue until you reach the umbrella’s policy limit. Therefore, to be safe, you should buy enough umbrella insurance so that your total liability covers your net worth.

Get Help From Leverty & Associates Law

At Leverty & Associates Law, we have attorneys who have dedicated their expertise, time, and knowledge to helping clients who require legal assistance. We have successfully helped many clients with their insurance problems and can help you, too. All you need to do is reach out to us. Contact us in Reno at (775) 322-6636 or Las Vegas at (702)507-0201 for a free consultation.