What is Umbrella Policy?
Updated January 24, 2026
An excess liability insurance policy that provides additional coverage above and beyond the limits of the policyholder's standard auto, homeowner's, or other liability insurance.
Understanding Umbrella Policy
Umbrella policies typically provide coverage in increments of $1 million or more and kick in when the underlying policy limits are exhausted. They can also cover claims that may be excluded by underlying policies. For personal injury claimants, discovering that the at-fault party has an umbrella policy can significantly increase the available coverage for their claim.
Examples
- 1At-fault driver's $1 million umbrella policy supplementing $300,000 auto limits
- 2Homeowner's umbrella covering a serious dog bite claim above standard limits
- 3Business owner's umbrella policy providing excess coverage for a slip and fall
Related Terms
Policy Limits
The maximum amount an insurance company will pay for a covered claim under an insurance policy.
Stacking
The practice of combining coverage limits from multiple insurance policies to increase the total amount of coverage available for a single claim.
Bodily Injury Liability
Auto insurance coverage that pays for injuries you cause to others in an accident, including medical expenses, lost wages, and pain and suffering.
Underinsured Motorist Coverage
Insurance coverage that protects you when the at-fault driver's liability insurance is insufficient to cover the full extent of your damages.
Uninsured Motorist Coverage
Insurance coverage that protects you if you're injured by a driver who has no liability insurance or insufficient coverage to pay for your damages.
For Personal Injury cases
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