How Umbrella Liability Insurance Works
Umbrella insurance is a type of liability insurance that provides businesses with an extra layer of coverage over and above standard liability policies. It’s classified under personal liability insurance.
Normally, umbrella liability insurance kicks in when you reach the limit on the underlying liability coverage in an auto, homeowners, renters or co-op / condo policy.
What is Umbrella Liability Insurance?
Umbrella insurance is a secondary type of liability insurance that provides coverage for claims not covered by the underlying policies. This type of liability insurance offers added liability protection for lawsuits or claims evidence shows that you are responsible for.
The alternative name for umbrella insurance is personal excess liability insurance.
The reason umbrella insurance is also known as personal excess liability insurance is because it expands your liability protection beyond what is in your auto, car, homeowners, and boat insurance for an international coverage up to $50 million.
Personal excess liability insurance coverage highlights the following; personal injury, property damage and bodily injury, defense costs and excess uninsured/underinsured motorist protection.
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When is the Right Time to Get Umbrella Liability Insurance Quote?
The reason why you need umbrella liability insurance coverage is because there’s a limit to what your property and casualty policies can cover.
The right time to get this personal excess liability is when you’ve not gotten yourself into a mess yet. This is because umbrella insurance policy is inexpensive. It can cost around $150 to $300 per year for a $1 million in liability coverage.
There’s a minimum amount of liability required for you to qualify for umbrella policy. Most insurance companies would require you to insure all your properties and policies with them in order for you to qualify for umbrella liability insurance coverage. Otherwise, they can’t offer it to you.
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How Umbrella Liability Insurance Works

The primary role of an umbrella liability insurance is to cover you for litigations arising from property damage and bodily injuries, and legal defense costs in excess of your other liability coverage.
A typical example is when your car insurance policy has liability coverage of $300,000 but the legal consequences of an accident that you are charged to be at fault demands that you pay $500,000. Without an umbrella liability insurance, you will be forced to offset the balance of $200,000 from your pocket, assets or future earnings but if you have an umbrella insurance coverage, it will take care of the balance of $200,000 – thereby giving you peace of mind to continue your business operation.
Another example of how umbrella liability insurance works is when your dog bites a neigbhour who was out there taking a walk. If the person sues you to cover all the medical bills and the wages lost within the time he was taking treatment at the hospital, your umbrella insurance coverage will take care of it.
It is often regarded as a low-cost way to get extra liability coverage without breaking the bank.
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Does Umbrella Insurance Cover Breach of Contract
General liability insurance can cover claims up to a certain point. Filing for a breach of contract case instead of a negligence case is not the best way to file for an accident claim that occurred on the highway.
Without umbrella liability insurance coverage you might lose your home or expensive asset due to a major claim that is beyond what your existing liability can cover. Liability claims are always expensive but you can protect yourself if you can just add an inexpensive umbrella insurance coverage to your existing homeowner, auto or boat insurance policies.
The best way to get the best umbrella insurance quote online is to shop around and compare insurance quotes of various insurers. Alternatively, you can get an affordable umbrella insurance quote over the phone by calling a reliable insurance agent.